UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, ~~2017~~ 2018

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ____________________ to ____________________

Commission file number 000-55553

Central Federal Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Missouri		47-4884908
(State or other jurisdiction of		(I.R.S. Employer
(State or other jurisdiction of in Company or organization)		(I.R.S. Employer Identification Number)
in Company or organization)		Identification Number)

210 West 10^th Street, Rolla, Missouri		65401
(Address of Principal Executive Offices)		Zip Code

Registrant’s telephone number, including area code: (573) 364-1024

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K. [ ]

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

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] ~~(Do not check if a smaller reporting company)~~ Smaller reporting company [X] Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to ~~the~~ use the extended transition period ~~for~~ for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

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

The aggregate market value of the common stock held by non-affiliates as of June 3029, ~~2017~~2018 was $2325,~~270~~208,~~710~~064.

The number of shares outstanding of the registrant’s common stock as of March 12, ~~2018~~2019 was 1,~~675~~592,920.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant’s Proxy Statement filed for its ~~2018~~2019 Annual Meeting of Shareholders (Part III)

INDEX

Description			Page	~~Page~~
PART I
Item 1	Business	~~Business~~	1		1
Item 1A	Risk Factors	~~Risk Factors~~	15		15
Item 1B	Unresolved Staff Comments	~~Unresolved Staff Comments~~	15		15
Item 2	Properties	~~Properties~~	15		15
Item 3	Legal Proceedings	~~Legal Proceedings~~	15		15
Item 4	Mine Safety Disclosure	~~Mine Safety Disclosure~~	15		15
PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	~~Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	15		15
Item 6	Selected Financial Data	~~Selected Financial Data~~	16		16
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	17		17
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	~~Quantitative and Qualitative Disclosures about Market Risk~~	31		31
Item 8	Financial Statements and Supplementary Data	~~Financial Statements and Supplementary Data~~	31		31
Item 9	Changes in and Disagreements with Accountants On Accounting and Financial Disclosure	~~Changes in and Disagreements with Accountants On Accounting and Financial Disclosure~~	31		31
Item 9A	Controls and Procedures	~~Controls and Procedures~~	31		31
Item 9B	Other Information	~~Other Information~~	32		32
PART III
Item 10	Directors, Executive Officers and Corporate Governance	~~Directors, Executive Officers and Corporate Governance~~	33		33
Item 11	Executive Compensation	~~Executive Compensation~~	33		33
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~	33		33
Item 13	Certain Relationships and Related Transactions and Director Independence	~~Certain Relationships and Related Transactions and Director Independence~~	33		33
Item 14	Principal Accounting Fees and Services	~~Principal Accounting Fees and Services~~	33		33
PART IV
Item 15	Exhibits, Financial Statement Schedules	~~Exhibits, Financial Statement Schedules~~	34		34
		Signatures			66
Item 16	Form 10-K Summary		34
	Signatures		35

EXHIBITS INDEX

PART I

Item 1. Business

General

Central Federal Bancshares, Inc., a Missouri corporation (“Central Federal Bancshares” or the “Company”), was incorporated in 2015 to be the holding company for Central Federal Savings and Loan Association of Rolla, Rolla, Missouri (“Central Federal”), upon completion of the conversion of Central Federal from the mutual to the stock form of organization. (In certain instances where appropriate, the terms “we,” “us” and “our” refer to Central Federal Bancshares and/or Central Federal, as indicated by context.) On January 12, 2016, the mutual to stock conversion was completed and Central Federal became the wholly owned subsidiary of the Company. Also, on that date, the Company issued 1,719,250 shares of its common stock at a price of $10.00 per share, including the sale of 143,042 shares to the Central Federal Savings and Loan Association of Rolla Employee Stock Ownership Plan in the stock offering, and it contributed 68,770 shares of common stock and $100,000 in cash to the Central Federal Community Foundation. As of December 31, ~~2017~~2018, Central Federal Bancshares had 1,~~675~~592,920 shares of common stock outstanding.

The Company’s primary business activity is the ownership of the outstanding capital stock of Central Federal. The Company does not own or lease any property but instead uses the premises, equipment and other property of Central Federal with the payment of appropriate rental fees, as required by applicable law and regulations, under the terms of an expense allocation agreement into which the Company and Central Federal have entered. The expense allocation agreement generally provides that the Company will pay to Central Federal, on a quarterly basis, fees for its use of Central Federal’s premises, furniture, equipment and employees in an amount to be determined by the board of directors of the Company and Central Federal. In addition, the Company and Central Federal have also entered into a tax allocation agreement as a result of their status as members of an affiliated group for purposes of the Internal Revenue Code. The tax allocation agreement generally provides that the Company will file consolidated federal income tax returns with Central Federal and its subsidiaries. The tax allocation agreement also formalizes procedures for allocating the consolidated tax liability of the group among its members and establishes procedures for the future payments by Central Federal to the Company for tax liabilities attributable to Central Federal and its subsidiaries.

Central Federal is a community-oriented financial institution, dedicated to serving the financial service needs of customers within its market area, which generally consists of Phelps County, Missouri, although it also services customers in the contiguous Missouri counties of Dent, Texas, Crawford, Pulaski and Maries. Central Federal offers a variety of loan and deposit products to meet the borrowing needs of our customers. Our real estate loans consist primarily of residential loans, including owner-occupied and nonowner-occupied one- to four-family residential loans. We also offer commercial and multi-family real estate loans, commercial business loans and consumer loans, including automobile and recreational vehicle loans. We currently operate out of our office in Rolla, Missouri. We are subject to extensive regulation, examination and supervision by the Office of the Comptroller of the Currency (“OCC”), our primary federal regulator, and the Federal Deposit Insurance Corporation (“FDIC”), our deposit insurer. At December 31, ~~2017~~2018, Central Federal had total assets of $6869.12 million, total deposits of $4143.68 million and total stockholders’ equity of $2625.32 million.

Market Area

We are headquartered and maintain our sole office in Rolla, Missouri, and we consider our primary deposit and lending market to be Phelps County, Missouri. Rolla is located along Interstate 44 in south-central Missouri, less than 100 miles from major Missouri population centers of St. Louis, Jefferson City, Columbia and Springfield. With a population of approximately 20,~~075~~293 according to U.S. Census Bureau estimates, Rolla is the largest city, and center of government, of Phelps County, which has a population of approximately 44,~~608~~744, also according to U.S. Census Bureau estimates. Rolla is home to Missouri University of Science and Technology, a public, leading technological research university within Missouri that has an enrollment as of Fall ~~2017~~2018 of approximately 8,~~885~~416 students. Other major employers in Rolla and Phelps County include Phelps County Regional Medical Center and other health care service providers, as well as Walmart Stores, Inc. (including a regional distribution center in St. James, Missouri) and various agencies of the federal and state governments.

Competition

We face significant competition within our market both in making loans and attracting deposits. Our market area has a high concentration of financial institutions, including a large money center, regional and super regional banks, community banks and credit unions. Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies.

As of ~~September~~June 30, ~~2017~~2018 (the latest date for which information is available), according to the U.S. Deposit Market Share by County compiled by SNL Financial, Central Federal represented 5.462% of deposits in Phelps County, Missouri, ranking us ~~sixth~~ seventh out of the ~~County~~county’s ten FDIC-insured institutions, which are comprised of 19 office locations. This data does not include credit unions with whom we also compete.

Lending Activities

General. Lending is our principal business activity, and our loan portfolio constitutes the largest portion of our assets and is the predominant source of our interest income. Management believes that Central Federal has a history of loans to credit-worthy individuals secured by their personal residences. The largest segment of our loan portfolio is real estate loans, consisting primarily of residential real estate loans (including one- to four-family and home equity loans), and, to a lesser extent, commercial and multi-family real estate loans, commercial business loans, and consumer loans. We are a portfolio lender and we retain substantially all loans we originate in our portfolio.

The following is a description of the loans we offer and our lending policies. Virtually all of our secured loans, including in particular our one- to four-family residential real estate loans, are secured by properties located in our primary lending area, which we define as Phelps County, Missouri. Any exception to our loan policies must be approved by the individuals or committee having authority to approve a comparable loan that conforms fully with our lending policies.

Residential Real Estate Loans. At December 31, ~~2017~~2018 and ~~2016~~2017, we had $3332.8 million and $33.08 million in residential real estate loans, which represented 6459.68% and 6664.6%, respectively of our total loan portfolio, comprised of owner-occupied one- to four-family loans, nonowner-occupied one- to four-family loans, one- to four-family construction loans, home equity lines of credit and other junior lien loans, and land loans. The following table provides more information about our residential real estate loan portfolio at December 31, ~~2017~~2018 and ~~2016~~2017:

	December 31, 2017					December 31, 2016
	December 31, 2018					December 31, 2017
			Percent of					Percent of
Category	Amount		Gross Loans			Amount		Gross Loans
			(Dollars in thousands)
Owner-occupied one- to four-family	$	2120,~~420~~520		4137.05	%	$	2021,~~854~~420		4241.10	%
Nonowner-occupied one- to four-family		98,~~190~~662		1715.68	%		9,~~493~~190		1917.26	%
Construction, one- to four-family		~~852~~1,370		12.65	%		~~923~~852		1.96	%
Home equity line of credit and junior liens		1,~~520~~600		2.9	%		1,~~361~~520		2.79	%
Land		~~771~~622		1.51	%		~~368~~771		01.75	%
	$	3332,~~753~~774		6459.68	%	$	3233,~~999~~753		6664.6	%

Our origination of residential real estate loans enables borrowers to purchase or refinance existing one- to four-family residences, virtually all of which are located in our primary market area.

We offer adjustable-rate and fixed-rate residential real estate loans with terms of up to 30 years. Because we have not historically sold any of the one- to four-family residential real estate loans that we have originated, we have not originated these loans in conformance with either Fannie Mae or Freddie Mac underwriting guidelines, although we believe our underwriting guidelines are substantially similar. We generally do not originate or fund fixed-rate mortgage loans to hold in our loan portfolio at the present time; however, we have previously made long-term fixed-rate loans as part of our lending program and we expect to originate and fund fixed-rate loans for retention in our portfolio as part of our operating strategy to increase our loan portfolio. Our portfolio included approximately $1115.9 million of such loans as of December 31, ~~2017~~2018. To the extent we currently participate in in the origination of long-term fixed-rate residential real estate loans, we do so under the terms of arrangements we have entered into with another financial institution. Under this arrangement, we assist in the completion of a loan application and obtain certain financial information about the applicant on behalf of the originating institution, which then underwrites the loan pursuant to its own lending policies, and, if it approves the loan, funds the loan directly. We receive a fee for our services. Currently, we do not offer loans insured by the Federal Housing Administration or guaranteed by the U.S. Department of Veterans Affairs, although these types of loans may be obtained by our customers through the loan arrangements described above. We determine the loan fees, interest rates and other provisions of the mortgage loans we originate, fund and hold in our portfolio based on our own pricing criteria and competitive market conditions.

While residential real estate loans are generally originated with up to 30-year terms, such loans typically remain outstanding for substantially shorter periods because borrowers often prepay their loans in full either upon sale of the property pledged as security or upon refinancing the original loan. Therefore, average loan maturity is a function of, among other factors, the level of purchase and sale activity in the real estate market, prevailing interest rates and the interest rates payable on outstanding loans on a regular basis. We do not offer residential real estate loans with negative amortization, and we do not make interest only residential real estate loans.

Although adjustable-rate mortgage loans may reduce to an extent our vulnerability to changes in market interest rates because they periodically reprice, as interest rates increase the required payments due from the borrower also increase (subject to rate caps), increasing the potential for default by the borrower. At the same time, the ability of the borrower to repay the loan and the marketability of the underlying collateral may be adversely affected by higher interest rates. Upward adjustments of the contractual interest rate is also limited by the maximum periodic and lifetime rate adjustments permitted by our loan documents. As a result, the effectiveness of adjustable-rate mortgage loans in compensating for changes in general interest rates may be limited during periods of rapidly rising interest rates.

We require an escrow for funds to pay property insurance and real estate taxes for the owner-occupied home mortgage loans we make, and loans with loan-to-value ratios in excess of 90% require private mortgage insurance. We have observed a significant demand for residential real property used for investment or income purposes, which demand arises primarily from a high demand for off-campus housing for students attending the Missouri University of Science and Technology. We underwrite and price one- to four-family residential real estate loans that are nonowner-occupied as commercial loans; such loans are subject to a maximum loan-to-value ratio of 80% and are offered at fixed rates and with a term of one, three or five years and with payments based on a 25-year amortization.

Under our loan policy, which has been approved by our board, we require all properties securing mortgage loans to be appraised by a licensed, independent appraiser. We also require title insurance on all first mortgage loans. Borrowers must obtain hazard insurance, and flood insurance is required for all residential loans located in flood hazard areas. We do not offer, and have not offered, sub-prime or no-documentation mortgage loans.

We also originate loans for the construction of one- to four-family homes. At December 31, ~~2017~~2018, one- to four-family construction loans were $~~852,000~~1.4 million. Our construction loans generally provide for interest only payments during the construction phase, which is usually up to 12 months. At the end of the construction phase, the loan generally converts to a permanent mortgage loan. Loans generally can be made with a maximum loan to value ratio of 85% on residential construction, based on the appraised value as if complete. Before making a commitment to fund a construction loan, we require an appraisal of the property by an independent, licensed appraiser. We also will generally require an inspection of the property before disbursement of funds during the term of the construction loan. Finally, we also originate loans to individuals for the purpose of purchasing land for future construction of one- to four-family residences, and we offer land loans under the same general terms as nonowner-occupied one- to four-family homes described above (fixed interest rates and one, three or five year maturities, with payments amortized based on a 25-year schedule). We limit the loan-to-value ratio to a maximum of 65%.

We make home equity lines of credit and, on occasion, other junior lien loans. Home equity lines of credit are made for terms of up to 20 years at adjustable rates, with the amount of the home equity line, when combined with the amount outstanding under any first mortgage, limited to an 80% loan to value ratio. All of our home equity lines of credit currently offered are adjustable-rate loans with rates tied to the prime rate as reported in The Wall Street Journal. Our home equity lines of credit are secured by residential real estate but we do not necessarily also maintain the first mortgage on the real estate. As of December 31, ~~2017~~2018, we had $1.56 million of home equity and other junior lien loans.

Commercial and Multi-Family Real Estate Loans. At December 31, ~~2017~~2018 and ~~2016~~2017, we had $1619.5 million and $1416.45 million in commercial and multi-family real estate loans, which represented 3135.6% and 2931.26%, respectively, of our total loan portfolio, comprised of of loans and lines of credit secured by commercial real estate, including multi-family residential real estate and owner-occupied commercial property. The following table provides more information about our commercial and multi-family real estate loan portfolio at December 31, ~~2017~~2018 and ~~2016~~2017:

	December 31, 2017					December 31, 2016
	December 31, 2018					December 31, 2017
			Percent of					Percent of
Category	Amount		Percent of Gross Loans			Amount		Percent of Gross Loans
Category	Amount		Gross Loans			Amount		Gross Loans
	(Dollars in thousands)
			(Dollars in thousands)
Multi-Family	$	9,913		18.1	%	$	10,126		19.4	%
Multi-Family	$	10,126		19.4	%	$	7,278		14.7	%
Multi-Family Construction		826		1.5			402		0.8
Multi-Family Line of Credit		0		0			30		0.1
Commercial Real Estate		8,385		15.3			5,042		9.7
Multi-Family Construction		402		0.8			1,100		2.2
Commercial Real Estate Lines of Credit		390		0.7			902		1.7
Commercial Real Estate		5,042		9.7			4,350		8.8
Commercial Real Estate Construction		-		0			31		0.1
Commercial Real Estate Lines of Credit		902		1.7			956		1.9
	$	19,514		35.6	%	$	16,503		31.6	%
Commercial Real Estate Construction		31		0.1			714		1.5
	$	16,503		31.6	%	$	14,428		29.2	%

We offer loans secured by multi-family residential real property, including loans to finance the construction of multi-family residences, and also commercial real estate loans and lines of credit, including commercial real estate construction loans.

Multi-family residential real property loans are offered at fixed rates, with a one, three or five year maturity, with payments on a 25-year amortization schedule, and are subject to a loan-to-value ratio of 80% of the lesser of appraised value or the purchase price. We also offer multi-family residential construction loans and commercial construction loans with a maximum loan-to-value ratio of 80%. Finally, we offer commercial (non-residential) real estate loans with a maximum loan-to-value ratio of 80% of the lower of the appraised value or the purchase price of the property, with one, three or five year terms and payments on a 25-year amortization schedule. Commercial real estate lines of credit are available with a one-year maturity.

We require all properties securing commercial mortgage loans to be appraised by a licensed, independent appraiser. We also require title insurance on all first mortgage loans. Borrowers must obtain hazard insurance, and flood insurance is required for all commercial loans located in flood hazard areas. Almost all of our commercial real estate loans are collateralized by office buildings, mixed-use properties and owner-occupied, commercial real estate located in Phelps County, Missouri.

Commercial Business Loans. We make a relatively limited amount of commercial business loans that are either secured by assets other than real property or that are not secured. As of December 31, ~~2017~~2018, and ~~2016~~2017, we had commercial business loans of $1.37 million, or 23.51% of our total loan portfolio, and $1.53 million, or 32.15%, of our total loan portfolio, respectively. For secured commercial loans and lines of credit, the interest rate and other terms are determined based upon the financial condition, including net worth, of the borrower as well as the type of collateral to secure the loan. Collateral for secured commercial business loans generally consists of the borrower’s accounts receivable, inventory and furniture, fixtures and equipment, although deposit accounts at Central Federal may also be pledged. We make unsecured commercial extensions of credit if the financial condition of the borrower is sufficient to support the loan; most of our unsecured commercial credits consist of lines of credit.

Consumer and Other Loans. Our consumer lending consists primarily of loans secured by used automobiles or other personal vehicles and, to a lesser extent, unsecured personal loans and loans secured by deposit accounts (share loans) at Central Federal. As of December 31, ~~2017~~2018 and ~~2016~~2017, we had consumer and other loans of $~~683~~839,000, or 1.35% of our total loan portfolio, and $~~558~~683,000, or 1.13% of our total loan portfolio, respectively. The following table provides additional information relating to our consumer lending.

	December 31, 2017					December 31, 2016
	December 31, 2018					December 31, 2017
			Percent of					Percent of
Category	Amount		Gross Loans			Amount		Gross Loans
			(Dollars in thousands)
Personal Auto Loans	$	~~466~~572		01.90	%	$	~~278~~466		0.69	%
Personal Unsecured Loans		65135		0.13			5665		0.1
Share Loans		7043		0.1			8270		0.21
Overdraft		1410		-			1714		-
Other Secured Loans		6879		0.1			~~125~~68		0.21
	$	~~683~~839		1.35	%	$	~~558~~683		1.13	%

Loan Underwriting and Collections

Loan Approval Procedures and Authority. Pursuant to applicable law, the aggregate amount of loans that we are permitted to make to any one borrower or a group of related borrowers is generally limited to 15% of Central Federal’s unimpaired capital and surplus (25% if the amount in excess of 15% is secured by “readily marketable collateral” or 30% for certain residential development loans). In November 2012, the OCC approved Central Federal’s application to participate in the supplemental lending limits program (“SLLP”). Under the SLLP, Central Federal may extend credit for an additional 10% of their unimpaired capital and surplus for one- to four-family residential real estate and small business loans. The amount we can lend under this limit increased as a result of the completion of the offering in January 2016 and the contribution of 50% of the net offering proceeds to Central Federal. At December 31, ~~2017~~2018, our regulatory loans-to-one-borrower limit under the SLLP was $5.23 million. As of December 31, ~~2017~~2018, our three largest commercial real estate lending relationships consisted of multiple extensions of credit, each secured by real property, to a group of related borrowers with an aggregate principal balance of approximately $6.8.0 million; an extension of credit to one borrower, secured by multiple properties, with an aggregate principal balance of approximately $2.01 million; ~~commercial~~a ~~multi-family~~loan ~~and~~secured ~~residential~~by ~~real~~a ~~estate~~local ~~loans~~fraternity with ana ~~aggregate~~ principal balance of approximately $12.89 million; and a ~~loan~~an additional loan secured by a local fraternity with a principal balance of approximately $3.0 million. At December 31, ~~2017~~2018, all of these ~~loans~~ loans were performing in accordance with their repayment terms.

Our lending is subject to written underwriting standards and origination procedures. Decisions on loan applications are made on the basis of written applications submitted by the prospective borrowers and property valuations (consistent with our appraisal policy) prepared by outside independent licensed appraisers, as well as internal evaluations where permitted by regulations. The loan applications are designed primarily to determine the borrower’s ability to repay the requested loan, and the more significant items on the application are verified through use of credit reports, financial statements and tax returns.

We have a loan committee comprised of our president, all loan officers (including our executive vice president – lending) and loan administration personnel. Minutes of the meetings of the loan committee are provided to our board on a monthly basis. Our executive vice president – lending and our three lending officers each has the authority to approve extensions of credit in amounts that, when aggregated with all other extensions of credit to the same or related borrowers, do not exceed $500,000. Our loan committee may approve loans in amounts that, when aggregated with all other extensions of credit to the same or related borrowers, do not exceed $750,000; all other loans must be approved by our board of directors.

Commercial and Multi-Family Real Estate, Nonowner-Occupied Residential Real Estate and Commercial Business Loans. We consider a number of factors in originating commercial real estate loans, including multi-family real estate and nonowner-occupied, one- to four-family residential real estate loans, as well as other commercial business loans. We evaluate the qualifications and financial condition of the borrower, including credit history, profitability and expertise, as well as the value and condition of property securing the loan. Under our lending policy, positive cash flow is a requirement for all commercial loans, and we generally require a borrower, irrespective of the income and debt service capacity of assets collateralizing the loan, to demonstrate a minimum debt service coverage ratio (the ratio of net operating income to debt service) of 1.2 to 1.0. We also consider the financial resources of the borrower, for real estate loans, the borrower’s experience in owning or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service and depreciation, the ratio of the loan amount to the appraised value of the mortgaged property and the debt service coverage ratio (the ratio of net operating income to debt service). All commercial business loans (including multi-family and nonowner-occupied real estate) are reviewed at least annually by Central Federal’s management. The review is based on the borrower (that is, all loans to one borrower are reviewed at the same time), and current financial information is obtained from the borrower and its principals at the time of the review. Loans that exceed $250,000 and that require an annual review are presented to and discussed at a meeting of our internal loan committee, loans that exceed $500,000 that require an annual review are presented to and discussed with our board of directors. All commercial and multi-family real estate loans, as well as all owner- and nonowner- occupied residential real estate loans, are appraised by outside independent, licensed appraisers. Personal guarantees are generally obtained from the principals of commercial and multi-family real estate loans.

Commercial loans, whether or not secured by real estate, entail greater credit risks compared to owner-occupied one- to four-family residential real estate loans because they typically involve larger loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment of loans secured by income-producing properties typically depends on the successful operation of the property, as repayment of the loan generally is dependent, in large part, on sufficient income from the property to cover operating expenses and debt service. Changes in economic conditions that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Additionally, any decline in real estate values may be more pronounced for commercial real estate than residential properties.

Collection Procedures. When a borrower fails to make required payments on a loan, we take a number of steps to induce the borrower to cure the delinquency and restore the loan to current status. We generally send a written notice of non-payment to the borrower between 15 and 30 days (depending on any payment grace period associated with the loan) following the missed payment and will follow up with a telephone call to the borrower if payment has not been made. If the loan remains unpaid, a further seriously past due notice is generated and mailed to the borrower, and we will make another telephone call, or an in-person visit, to the borrower. If the loan continues to remain unpaid and satisfactory payment arrangements have not been made with us, we send a letter demanding payment within 30 days; if we do not receive a satisfactory response, we may, in our discretion, turn the matter over to our attorney for further action, including the initiation of foreclosure proceedings.

The accrual of interest on real estate and commercial business loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in process of collection. Personal loans are typically charged off no later than 180 days past due. Past due status is based on 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. Loans returned to accrual status when all the principal and interest amounts contractually are brought current, the borrower has demonstrated a period of sustained performance and future payments are reasonably assured. A sustained period of repayment performance generally would be a minimum of six months. Management reports loan delinquencies to the board of directors on a monthly basis. Additional information with respect to our loans is available under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Balance Sheet Analysis as of December 31, 2017 and December 31, 2016.”5

The accrual of interest on real estate and commercial business loans is discontinued at the time the loan is 90 days past due unless the credit is well secured and in process of collection. Personal loans are typically charged off no later than 180 days past due. Past due status is based on 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. Loans returned to accrual status when all the principal and interest amounts contractually are brought current, the borrower has demonstrated a period of sustained performance and future payments are reasonably assured. A sustained period of repayment performance generally would be a minimum of six months. Management reports loan delinquencies to the board of directors on a monthly basis. Additional information with respect to our loans is available under “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Balance Sheet Analysis as of December 31, 2018 and December 31, 2017.”

Loan Commitments. We issue commitments for one- to four-family residential real estate loans conditioned upon the occurrence of certain events. Commitments to originate mortgage loans are legally binding agreements to lend to our customers. Most of our loan commitments expire after 30 days. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Off-Balance Sheet Arrangements.”

Construction Loans. Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays and cost overruns. If the estimate of construction costs proves to be inaccurate, we may be required to advance funds beyond the amount originally committed to permit completion of the building. If the estimate of value proves to be inaccurate, we may be confronted, at or before the maturity of the loan, with a building having a value that is insufficient to assure full repayment if liquidation is required. If we are forced to foreclose on a building before or at completion due to a default, we may be unable to recover all of the unpaid balance of, and accrued interest on, the loan as well as related foreclosure and holding costs. For construction loans secured by residential real estate (including loans we consider to be commercial loans), we disburse funds upon request and upon an inspection of the property by Central Federal personnel. For larger commercial loans, we generally advance funds only upon receipt of certification from an engineer or architect.

Home Equity Lines of Credit. In the case of home equity lines of credit, real estate values may be reduced to a level that is insufficient to cover the outstanding loan balance after accounting for the first mortgage loan balance. Loan collections depend on the borrower’s continuing financial stability, and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Home equity lines of credit have greater risk than one- to four-family residential real estate loans secured by first mortgages, primarily the risk that the collateral will be insufficient to compensate us for loan losses and costs of foreclosure. When customers default on their loans, we attempt to foreclose on the property and resell the property as soon as possible to minimize foreclosure and carrying costs utilizing the policies and procedures described above. The value of the collateral, however, may not be sufficient to compensate us for the amount of the unpaid loan and we may be unsuccessful in recovering the remaining balance from those customers. Decreases in real estate values could adversely affect the value of property used as collateral for our loans.

Investment Activities

Our board of directors has the overall responsibility for the investment portfolio, including approval of the investment policy. Our primary investment objectives are: (i) to provide and maintain liquidity; (ii) to fully employ the available funds of Central Federal; (iii) to earn an average rate of return on invested funds competitive with comparable institutions; (iv) to manage interest rate risk; and (v) to limit credit and interest rate risk. Our chief executive officer is responsible for the implementation of our policy and monitoring our investment performance. Our board of directors reviews the status of our investment portfolio on a monthly basis.

We have legal authority to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various government-sponsored agencies and of state and municipal governments, mortgage-backed securities and certificates of deposit of federally insured institutions. Within certain regulatory limits, we also may invest a portion of our assets in other permissible securities. As a member of the Federal Home Loan Bank of Des Moines, we also are required to maintain an investment in the stock of that institution.

We have an investment portfolio comprised of $118.94 million of certificates of deposit in other financial institutions and available for sale securities. At December 31, ~~2017~~2018, our investment portfolio was comprised of certificates of deposit in other financial institutions, each under $250,000 and each at a different insured depository institution. We also have investments, categorized as available-for-sale, in a municipal obligation with a fair value of $~~412~~402,000, mortgage backed securities with a fair value of $4.90 million, a Small Business Administration (“SBA”) pool with a fair value of $~~885~~795,000, and stock of the ~~Federal~~ Federal Home Loan Mortgage Corporation with a fair value of $4017,000, as of December 31, ~~2017~~2018. The municipal obligation has a coupon ~~rate~~ rate of 3.25%, matures in March 2033, and is callable in March 2023. The SBA Pool has a coupon of 2.27% and matures in February 2036. The mortgage backed securities have a coupon of 2.7784%. Our investment strategy has remained consistent with our current ~~philosophy~~ philosophy of maintaining excess cash in interest-bearing deposits held in other financial institutions; we have and may continue to, on a limited basis, invest in debt securities. In addition to our investment portfolio, at December 31, ~~2017~~2018, we held $8982,000 of of Federal Home Loan Bank of Des Moines stock, carried at cost.

Deposit Activities and Other Sources of Funds

General. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We have not historically used borrowings and we had no outstanding borrowings at December 31, ~~2017~~2018 or at December 31, ~~2016~~2017. In addition, we receive funds from scheduled loan payments, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition.

Deposit Accounts. Deposits generally are attracted from within our market area through the offering of a broad selection of deposit instruments, including non-interest-bearing demand deposits (such as checking accounts), interest-bearing demand accounts (such as NOW and money market accounts), statement savings accounts and certificates of deposit. On occasion, Central Federal will accept deposits, typically in the form of certificate of deposit in denominations of $100,000 or greater, from other financial institutions. We do not have a formal program or policy with respect to such deposits, which are typically initiated by the other institution; rather, we will accept the deposits if, when the opportunity to accept the deposit arises, our management determines that the deposit is appropriate for us. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors. As of December 31, ~~2017~~2018 and ~~2016~~2017, there were $0no ~~and $2.5 million, respectively, in~~ deposits from such other financial institutions.

Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. The flow of deposits is influenced significantly by general economic conditions, changes in interest rates and competition. Our ability to gather deposits is affected by the competitive market in which we operate, which includes numerous financial institutions of varying sizes offering a wide range of products. We believe that deposits are a stable source of funds, but our ability to attract and maintain deposits at favorable rates will be affected by market conditions, including competition and prevailing interest rates.

Borrowings. As a member of the Federal Home Loan Bank of Des Moines, Central Federal is eligible to obtain advances upon the security of the Federal Home Loan Bank common stock owned and certain residential real estate loans, provided certain standards related to credit-worthiness have been met. Federal Home Loan Bank advances are available pursuant to several credit programs, each of which has its own interest rate and range of maturities. Central Federal also is eligible, upon the satisfaction of collateral security and other requirements, to borrow from the Federal Reserve Bank of St. Louis. While we have obtained Federal Home Loan Bank advances in the past, we had no outstanding borrowings from the Federal Home Loan Bank or Federal Reserve Bank at December 31, ~~2017~~2018 or ~~2016~~2017.

Personnel

As of December 31, ~~2017~~2018, we had 1516 full-time equivalent employees, none of whom isare represented by a collective bargaining unit. ~~We believe we have a good relationship with our employees.~~

Subsidiaries

We have no subsidiaries other than Central Federal.

Regulation and Supervision

General

Central Federal, as a federal savings association, is subject to extensive regulation, examination and supervision by the OCC, as its primary federal regulator, and by the FDIC as the insurer of its deposits. Its deposit accounts are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Central Federal must file reports with the OCC concerning its activities and financial condition in addition to obtaining regulatory approvals before entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic examinations by the OCC to evaluate Central Federal’s safety and soundness and compliance with various regulatory requirements. This regulatory structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for loan losses for regulatory purposes.

As a savings and loan holding company, the Company is subject to examination and supervision by, and is required to file certain reports with, the Federal Reserve Board. Central Federal Bancshares is also subject to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) under the federal securities laws.

Set forth below are certain material regulatory requirements that are applicable to Central Federal and Central Federal Bancshares. This description of statutes and regulations is not intended to be a complete explanation of such statutes and regulations or their effects on Central Federal and Central Federal Bancshares, and is qualified in its entirety by reference to applicable laws and regulations. Any change in these laws or regulations, whether by Congress or the applicable regulatory agencies, could have a material adverse impact on Central Federal Bancshares, Central Federal and their operations.

Federal Banking Regulation

Business Activities. The activities of federal savings associations, such as Central Federal, are governed by federal laws and regulations. Those laws and regulations delineate the nature and extent of the business activities in which federal savings associations may engage. In particular, certain lending authority for federal savings associations, e.g., commercial, nonresidential real property loans and consumer loans, is limited to a specified percentage of the association’s capital or assets.

Capital Requirements. Central Federal is subject to minimum regulatory capital requirements imposed under OCC regulations. Federal regulations establish the minimum capital level requirements applicable to FDIC-insured institutions of at least: (i) a a common equity Tier 1 risk-based capital ratio of 4.5%; (ii) a Tier 1 risk-based capital ratio of 6%; (iii) a total capital ratio of 8%; and (iv) a Tier 1 leverage ratio of 4%. The rules also established a “capital conservation buffer” of 2.5% above the regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result, in effect, in the following minimum ratios: (i) a common equity Tier 1 risk-based capital ratio of 7.0%, (ii) a Tier 1 risk-based capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement began a phase-on period in January 2016 at .625% of risk-weighted assets and will increase by that amount each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

The capital rules require a number of changes to regulatory capital deductions and adjustments, subject to a transition period. Among other changes, the rules provide for a one-time, permanent opt-out from the treatment under such rules of certain items of accumulated other comprehensive income. The rules generally require the recognition in regulatory capital calculations of unrealized gains and losses. If an institution elects to opt-out, then the institution may continue treating accumulated other comprehensive income items in a manner consistent with the prior regulatory capital rules. The Company has made this opt-out election. The rules modify the calculation of risk-weighted assets, although they generally continue the treatment of residential mortgages under the prior rules. Under the rules, an institution may assign a 50% risk weight to a first-lien residential mortgage exposure that: (i) is secured by property that is owner-occupied or rented, (ii) is made in accordance with “prudent underwriting standards,” (iii) is not 90 ~~days or more past due or in nonaccrual status, and (iv) is not restructured or modified. Other first-lien residential exposures, as well as junior-lien exposures, are assigned a 100% risk weight.~~

days or more past due or in nonaccrual status, and (iv) is not restructured or modified. Other first-lien residential exposures, as well as junior-lien exposures, are assigned a 100% risk weight.

The exposure amount for on-balance sheet assets is generally the carrying value of the exposure as determined under GAAP. If a banking organization has elected to opt out of the accumulated other comprehensive income provisions discussed above, the exposure amount for available for sale or held-to-maturity debt securities is the carrying value (including accrued but unpaid interest and fees) of the exposure, less any net unrealized gains plus any unrealized losses. Further, the rules retain the prior risk-weighting rules for exposures to debt directly and unconditionally guaranteed by U.S. federal government and its agencies. Such exposures receive a 0% risk weight. Exposures conditionally guaranteed by the federal government, Federal Reserve Board or a federal government agency would receive a 20% risk weight. Further, the capital rules assign a 20% risk weight to non-equity exposures to government-sponsored entities (GSEs) and a 100% risk weight to preferred stock issued by a GSE. The rules define a GSE as an entity established or chartered by the federal government to serve public purposes but whose debt obligations are not “explicitly guaranteed” by the full faith and credit of the federal government. Institutions must assign a 20% risk weight to general obligations of a public sector entity (for example, a state, local authority or other governmental subdivision below the sovereign level) that is organized under U.S. law and a 50% risk weight for a revenue obligation of such an entity.

The OCC also has authority to establish individual minimum capital requirements in appropriate cases upon a determination that an institution’s capital level is or may become inadequate in light of the particular risks or circumstances.

Prompt Corrective Regulatory Action. Prompt corrective action regulations provide five classifications for insured depository institutions, such as Central Federal, and their holding companies: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. The OCC is required to take certain supervisory actions against undercapitalized institutions, with the severity of the action depending upon the institution’s degree of undercapitalization. In addition, numerous mandatory supervisory actions become immediately applicable to an undercapitalized institution, including, but not limited to, increased monitoring by regulators and restrictions on growth, capital distributions and expansion. The OCC could also take any one of a number of discretionary supervisory actions, including the issuance of a capital directive and the replacement of senior executive officers and directors. Significantly and critically undercapitalized institutions are subject to additional mandatory and discretionary measures.

Insurance of Deposit Accounts. Central Federal’s deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Deposit insurance per account owner is currently $250,000. Under the FDIC’s risk-based assessment system, insured institutions are assigned a risk category based on supervisory evaluations, regulatory capital levels and certain other factors. An institution’s assessment rate depends upon the category to which it is assigned, and certain adjustments specified by FDIC regulations. Institutions deemed less risky pay lower assessments. The FDIC may adjust the scale uniformly, except that no adjustment can deviate more than two basis points from the base scale without notice and comment. No institution may pay a dividend if in default of the federal deposit insurance assessment.

The FDIC has authority to increase insurance assessments. A significant increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of Central Federal. Management cannot predict what insurance assessment rates will be in the future.

Loans to One Borrower. Federal law provides that savings associations are generally subject to the limits on loans to one borrower applicable to national banks. Generally, subject to certain exceptions, a savings association may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of its unimpaired capital and surplus. An additional amount may be lent, equal to 10% of unimpaired capital and surplus, if secured by specified readily marketable collateral. At December 31, ~~2017~~2018, our regulatory loans-to-one borrower limitation under the supplemental lending limits program approved by the OCC was $5.23 million. All loans to one borrower that aggregate over $500,000 are reviewed by a Central Federal commercial loan officer and are presented to the board of directors annually. Further, our management reviews and recommends to the board of directors through our loan committee such lesser limitations on the extension of credit to a single borrower or borrowing entity as it feels prudent and in the best interest of Central Federal based on the current economic, competitive environment and the circumstances of Central Federal.

Qualified Thrift Lender Test. Federal law requires savings associations to meet a qualified thrift lender test. Under the test, a savings association is required to either qualify as a “domestic building and loan association” under the Internal Revenue Code or maintain at least 65% of its “portfolio assets” (total assets less: (i) specified liquid assets up to 20% of total assets; (ii) intangibles, including goodwill; and (iii) the value of property used to conduct business) in certain “qualified thrift investments” (primarily residential mortgages and related investments, including certain mortgage-backed securities but also including education, credit card and small business loans) in at least nine months out of each 12-month period.

A savings association that fails the qualified thrift lender test is subject to certain operating restrictions, such as making any new investments or engaging in any new activity not allowed for both a national bank and a savings association, establishing any new branch office unless establishment would be allowable for a national bank, and paying dividends unless such payment would be both allowable for a national bank and necessary to meet the obligations of the association’s holding company. The Dodd-Frank Act also specifies that failing the qualified thrift lender test is a violation of law that could result in an enforcement action and dividend limitations. As of December 31, ~~2017~~2018, Central Federal met the qualified thrift lender test.

Limitation on Capital Distributions. Federal regulations impose limitations upon all capital distributions by a savings association, including cash dividends, payments to repurchase the association’s shares and payments to shareholders of another institution in a cash-out merger. Under the regulations, an application to and the prior approval of the OCC is required before any capital distribution if (i) the institution does not meet the criteria for “expedited treatment” of applications under OCC regulations (i.e., generally, examination and Community Reinvestment Act ratings in the two top categories); (ii) the total capital distributions for the calendar year exceed net income for that year plus the amount of retained net income for the preceding two years; (iii) the institution would be undercapitalized following the distribution; or (iv) the distribution would otherwise be contrary to a statute, regulation or agreement with the OCC. If an application is not required, the institution must still provide 30 days’ prior written notice to, and receive the non-objection of the Federal Reserve Board for the capital distribution if, like Central Federal, it is a subsidiary of a holding company, as well as an informational notice filing to the OCC. If Central Federal’s capital ever fell below its regulatory requirements or the OCC notified it that it was in need of increased supervision, its ability to make capital distributions could be restricted. In addition, the OCC could prohibit a proposed capital distribution by any institution, which would otherwise be permitted by the regulation, if the OCC determines that such distribution would constitute an unsafe or unsound practice.

Community Reinvestment Act. All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. An institution’s failure to comply satisfactorily with the provisions of the Community Reinvestment Act could result in denials of regulatory applications. Responsibility for administering the Community Reinvestment Act, unlike other fair lending laws, is not being transferred to the Consumer Financial Protection Bureau. Central Federal received a “satisfactory” Community Reinvestment Act rating in its most recently completed examination.

Assessments. Central Federal is required to pay assessments to the OCC to fund the agency’s operations. The general assessments, paid on a semi-annual basis, are computed upon an association’s total assets, including consolidated subsidiaries, as reported in the association’s latest quarterly financial report. The assessments paid by Central Federal for the year ended December 31, ~~2017~~2018 totaled approximately $42,000.

Transactions with Related Parties. Federal law limits Central Federal’s authority to engage in transactions with “affiliates” (e.g., any entity that controls or is under common control with Central Federal, including the Company and any of its other subsidiaries). The aggregate amount of covered transactions with any individual affiliate is limited to 10% of the capital and surplus of the savings association. The aggregate amount of covered transactions with all affiliates is limited to 20% of the savings association’s capital and surplus. Certain transactions with affiliates are required to be secured by collateral in an amount and of a type specified by federal law. The purchase of low quality assets from affiliates is generally prohibited. Transactions with affiliates must generally be on terms and under circumstances that are at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies. In addition, savings associations are prohibited from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies, and no savings association may purchase the securities of any affiliate other than a subsidiary.

The Sarbanes-Oxley Act of 2002 generally prohibits loans by Central Federal to executive officers and directors. However, the law contains a specific exception for loans by a depository institution to its executive officers and directors in compliance with federal banking laws. Under such laws, Central Federal’s authority to extend credit to executive officers, directors and 10% shareholders (“insiders”), as well as entities such person’s control, is limited. The laws limit both the individual and aggregate amount of loans that Central Federal may make to insiders based, in part, on Central Federal’s capital level, and requires that certain board approval procedures be followed. Such loans are required to be made on terms substantially the same as those offered to unaffiliated individuals and may not involve more than the normal risk of repayment. There is an exception for loans made pursuant to a benefit or compensation program that is widely available to all employees of the institution and does not give preference to insiders over other employees. Loans to executive officers are subject to additional limitations based on the type of loan involved.

Enforcement. The OCC currently has primary enforcement responsibility over savings associations and has authority to bring actions against the institution and all institution-affiliated parties, including directors, officers, shareholders, and any attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful actions likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors to requiring receivership, conservatorship or termination of deposit insurance. Civil penalties cover a wide range of violations and can amount to $25,000 per day, or even $1.0 million per day in especially egregious cases. Additionally, the FDIC has the authority to recommend to the OCC that enforcement action be taken with respect to a particular savings association. If action is not taken by the OCC, the FDIC has authority to take such action under certain circumstances. Federal law also establishes criminal penalties for certain violations.

Federal Home Loan Bank System. Central Federal is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Central Federal, as a member of the Federal Home Loan Bank of Des Moines, is required to acquire and hold shares of capital stock in that Federal Home Loan Bank. Central Federal was in compliance with this requirement at December 31, ~~2017~~2018 with an investment in Federal Home Loan Bank stock with a book value of $8982,000.

Federal Reserve System. The Federal Reserve Board regulations require savings associations to maintain non-interest-earning reserves against their transaction accounts (primarily Negotiable Order of Withdrawal (NOW) and regular checking accounts).

Incentive Compensation. Guidelines adopted by the federal banking agencies pursuant to the Federal Deposit Insurance Act prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal stockholder.

The Federal Reserve Board has issued comprehensive guidance on incentive compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive risk-taking. The guidance is based upon the key principles that a financial institution’s incentive compensation arrangements should (i) provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identity and manage risks; (ii) be compatible with effective internal controls and risk management; and (iii) be supported by strong corporate governance, including active and effective oversight by the institution’s board of directors. Any deficiencies in compensation practices that are identified may be incorporated into the institution’s supervisory ratings, which can affect its ability to make acquisitions or perform other actions. Enforcement actions may be taken against an institution if its incentive compensation arrangements or related risk-management control or governance processes pose a risk to the institution’s safety and soundness and the institution is not taking prompt and effective measures to correct the deficiencies.

Other Regulations

Central Federal’s operations are also subject to federal laws applicable to credit transactions, such as, but not limited to, the:

	●	Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

	●	Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

	●	Equal Credit Opportunity Act, prohibiting discrimination based on race, creed or other prohibited factors in extending credit;

	●	Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;

	●	Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and

	●	Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The operations of Central Federal also are subject to the:

● Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; ● Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; ● Check Clearing for the 21st Century Act (also known as Check 21), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; ● Title III of The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (referred to as the USA PATRIOT Act), and the related regulations of the Federal Reserve Board, which require savings associations operating in the United States to develop new anti-money laundering compliance programs (including a customer identification program that must be incorporated into the AML compliance program), due diligence policies and controls to ensure the detection and reporting of money laundering; and ● ~~The~~ Bank Secrecy Act of 1970, which requires financial institutions in the United States to keep records of cash purchases of negotiable instruments, file reports of cash purchases of negotiable instruments exceeding a daily amount of $10,000 or more and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities. ● ~~The~~ Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act and its implementing regulations requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

Holding Company Regulation

General. As a savings and loan holding company, the Company is subject to Federal Reserve Board regulations, examinations, supervision, reporting requirements and regulations regarding its activities. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to Central Federal.

Pursuant to federal statutes, regulations and policy, a savings and loan holding company such as the Company may generally engage in the activities permitted for financial holding companies under Section 4(k) of the Bank Holding Company Act of 1956, as amended, and certain other activities that have been authorized for savings and loan holding companies by regulation.

Federal law prohibits a savings and loan holding company from, directly or indirectly or through one or more subsidiaries, acquiring more than 5% of the voting stock of another savings association, or savings and loan holding company thereof, without prior written approval of the Federal Reserve Board or from acquiring or retaining, with certain exceptions, more than 5% of a non-subsidiary holding company or savings association. A savings and loan holding company is also prohibited from acquiring more than 5% of a company engaged in activities other than those authorized by federal law or acquiring or retaining control of a depository institution that is not insured by the FDIC. In evaluating applications by holding companies to acquire savings associations, the Federal Reserve Board must consider the financial and managerial resources and future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance funds, the convenience and needs of the community and competitive factors.

The Federal Reserve Board is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings associations in more than one state, except for: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies; and (ii) the acquisition of a savings association in another state if the laws of the state of the target savings association specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Capital Requirements. ~~Savings~~In ~~and~~July ~~loan~~2013, ~~holding~~the ~~companies~~Federal ~~with~~Reserve ~~less~~Board ~~than~~approved $1a ~~billion~~new inrule ~~assets~~that ~~are~~implemented ~~not~~the ~~subject~~“Basel ~~to specific regulatory~~III” regulatory capital ~~requirements.~~reforms ~~The~~and changes required by the Dodd-Frank Act,. ~~however~~The final rule established consolidated capital requirements for many savings and loan holding companies. However, ~~requires~~under the Federal Reserve Board’s to“Small ~~promulgate~~Bank ~~consolidated~~Holding ~~capital requirements~~Company” ~~for~~exemption ~~depository~~from ~~institution~~consolidated ~~holding~~capital ~~companies~~requirements, ~~including~~ savings and loan holding companies ~~that~~with ~~are~~less nothan ~~less~~$3 ~~stringent,~~billion ~~both~~in ~~quantitatively~~consolidated ~~and~~assets, insuch ~~terms~~as ofthe ~~components~~Company, ofare exempt from consolidated regulatory capital requirements, ~~than~~unless ~~those~~the ~~applicable~~Federal toReserve ~~institutions~~Board ~~themselves~~determines otherwise in particular cases. See “Regulation and Supervision — Federal Banking Regulation — Capital Requirements.”

Source of Strength. The Dodd-Frank Act also extended the Federal Reserve Board’s “source of strength” doctrine to savings and loan holding companies such as the Company. The Federal Reserve Board has issued regulations implementing the “source of strength” policy requiring that holding companies act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial stress.

Dividends and Stock Repurchases. The Federal Reserve Board has the power to prohibit payment of dividends by savings and loan holding companies if their actions constitute unsafe or unsound practices. The Federal Reserve Board has issued a policy statement on the payment of cash dividends by bank holding companies and savings and loan holding companies which expresses the Federal Reserve Board’s view that a holding company should pay cash dividends only to the extent that the company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the company’s capital needs, asset quality and overall financial condition. The Federal Reserve Board has also indicated that it would be inappropriate for a holding company experiencing serious financial problems to borrow funds to pay dividends. Under the prompt corrective action regulations, the Federal Reserve Board may prohibit a savings and loan holding company from paying any dividends if the holding company’s bank subsidiary is classified as “undercapitalized.”

Federal Reserve Board policy also provides that a holding company should inform the Federal Reserve Board supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the holding company is experiencing financial weaknesses or if the repurchase or redemption would result in a net reduction, as of the end of a quarter, in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred.

Acquisition of Central Federal Bancshares. Under the federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire direct or indirect “control” of a savings and loan holding company or savings association. Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the outstanding voting stock of the company or institution, unless the Federal Reserve Board has found that the acquisition will not result in a change of control. A change in control definitively occurs upon the acquisition of 25% or more of a company’s outstanding voting stock. Under the Change in Control Act, the Federal Reserve Board generally has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effects of the acquisition. Any company that acquires control would then be subject to regulation as a savings and loan holding company.

Emerging Growth Company Status

The JOBS Act, which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as an emerging growth company under the JOBS Act.

An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes). Such a company also may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in a public offering prospectus. An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation; accordingly, the Company is not subject to the auditor attestation requirement or additional executive compensation disclosure so long as it remains a “smaller reporting company” under regulations of the SEC (generally less than $75 million of voting and non-voting equity held by non-affiliates). The JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to avail itself of this extended transition period.

A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.0 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under SEC regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

Forward-Looking Statements

Statements included in this report and in our future filings with the SEC, in our press releases, and in oral statements made with the approval of an authorized executive officer, which are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. These forward-looking statements are sometimes identified by the use of terms and phrases such as “believe,” “should,” “expect,” “project,” “estimate,” “anticipate,” “aim,” “intend,” “plan,” “will,” “can,” “may,” or similar expressions elsewhere in this report. Forward-looking statements include:

	●	statements of our goals, intentions and expectations;

	●	statements regarding our business plans, prospects, growth and operating strategies;

	●	statements regarding the quality of our loan and investment portfolios; and

	●	estimates of our risks and future costs and benefits.

Such statements are based on management’s current views and assumptions, and involve risks and uncertainties that could affect expected results. Those risks and uncertainties include but are not limited to the following:

● the strength of the U.S. economy in general and the strength of the local economies in that comprise our primary markets, including areas where we conduct substantial operations or have purchased a significant amount of correspondent loans; ● changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments; ● credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and in our allowance for loan losses and provision for loan losses; ● our ability to implement our strategic plans; ● changes in our organization, compensation and benefit plans, and our ability to attract and retain key members of our senior management team and to address staffing needs in response to product demand or to implement our strategic plans;

● our ability to implement our strategic plans; ● changes in our organization, compensation and benefit plans, and our ability to attract and retain key members of our senior management team and to address staffing needs in response to product demand or to implement our strategic plans; ● the use of estimates in determining fair value of certain of our assets, which may prove to be incorrect and result in significant declines in valuations; ● fluctuation in the demand for loans, which may be affected by the number of unsold homes, land and other properties in our market areas and by any declines in the value of real estate in our market area; ● our ability to attract and maintain deposits and our success in introducing new financial products; ● significant increases in our loan losses, including as a result of our inability to resolve classified and non-performing assets or reduce risks associated with our loans, and management’s assumptions in determining the adequacy of the allowance for loan losses; ● declines in the yield on our assets resulting from the current low interest rate environment; ● risks related to a high concentration of loans secured by real estate located in our market area; ● the results of examinations by our regulators, including the possibility that our regulators may, among other things, require us to increase our allowance for loan losses, write down assets, change our regulatory capital position, limit our ability to borrow funds or maintain or increase deposits, or prohibit us from paying dividends, which could adversely affect our dividends and earnings; ● our ability to have sufficient taxable income to be able to fully deduct contributions to our charitable foundation; ● changes in the level of government support of housing finance; ● our ability to enter new markets successfully and capitalize on growth opportunities; ● changes in our compensation and benefit plans; ● loan delinquencies and changes in the underlying cash flows of our borrowers; ● our ability to control costs and expenses, particularly those associated with operating as a publicly traded company; ● the failure or security breaches of computer systems on which we depend; ● the ability of key third-party service providers to perform their obligations to us; ● changes in the financial condition or future prospects of issuers of securities that we own; ● increased competitive pressures among financial services companies; ● changes in consumer spending, borrowing and savings habits; ● adverse changes in the financial industry, securities, credit and national and local real estate markets (including real estate values); ● changes in laws or government regulations or policies affecting financial institutions, including the Dodd-Frank Act, which could result in, among other things, increased deposit insurance premiums and assessments, capital requirements (particularly the new capital regulations), regulatory fees and compliance costs and the resources we have available to address such changes; ● changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the SEC, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board; ● the effects of, and changes in, trade and fiscal policies and laws of the United States government and federal executive branch, including changes in foreign and military policies; and ● other economic, competitive, governmental, regulatory and operational factors affecting our operations, pricing, products and services described elsewhere in this report.

Our results of operations and financial condition may differ materially from those in the forward-looking statements. Any of the forward-looking statements that we make in this report and in other public statements we make may later prove incorrect because of inaccurate assumptions, the factors illustrated above or other factors that we cannot foresee. Consequently, no forward-looking statement can be guaranteed.

You should not rely upon forward-looking statements that we make in this report and in other public statements we make as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.

Item 1A. Risk Factors

The presentation of Risk Factors is not required for smaller reporting companies such as the Company.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The Company and Central Federal operate from our office located at 210 West 10th Street, Rolla, Missouri 65401. The net book value of our premises at December 31, ~~2017~~2018 was $~~543~~506,000.

Item 3. Legal Proceedings

Periodically, there may be various claims and lawsuits against Central Federal or brought by us, such as claims to enforce liens, condemnation proceedings on properties in which Central Federal holds security interests, claims involving the making and servicing of real property loans and other issues incident to its business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

Item 4. Mine Safety Disclosure

Not applicable.

PART II

Item 5. Market for ~~the~~ Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Holder and Dividend Information. The common stock of the Company is quoted on the OTC Pink Marketplace under the symbol “CFDB.” The following table sets forth the high and low bid information of the common stock and dividends paid per share for the quarters ~~(or applicable portion of such quarters)~~ ended March 31, June 30, September 30, and December 31 of each of ~~2017~~2018 and ~~2016~~2017. The stated high and low bid quotations reflect inter-dealer prices, without retail markup, markdown or commission, and may not represent actual transactions.

	High		Low		Close		Dividends Declared Per Share
Quarter ended March 31, 2018	$	14.50	$	14.20	$	14.47		—
Quarter ended June 30, 2018	$	14.40	$	13.55	$	14.40		—
Quarter ended September 30, 2018	$	14.40	$	13.50	$	13.50		—
Quarter ended December 31, 2018	$	13.65	$	12.70	$	13.30		—
Quarter ended March 31, 2017	$	13.00	$	12.27	$	12.50		—
Quarter ended June 30, 2017	$	13.50	$	12.42	$	13.25		—
Quarter ended September 30, 2017	$	16.00	$	13.25	$	13.75		—
Quarter ended December 31, 2017	$	14.59	$	13.25	$	14.50		—
Jan. 13, 2016 - March 31, 2016	$	10.95	$	10.40	$	10.80		—
Quarter ended June 30, 2016	$	11.60	$	10.75	$	11.23		—
Quarter ended September 30, 2016	$	11.82	$	11.21	$	11.77		—
Quarter ended December 31, 2016	$	13.20	$	11.77	$	12.75		—

The approximate number of holders of record of the Company’s common stock as of March 12, ~~2018~~2019 was 9491. Certain shares of the Company are held in “nominee” or “street” name and, accordingly, the number of beneficial owners of such shares is not known or included in the ~~preceding~~foregoing number.

The Company has not declared dividends on its common stock. Dividend payments by the Company are dependent in part on dividends it receives from Central Federal because the Company has no source of income other than dividends from Central Federal, earnings from the investment of proceeds from the sale of shares of common stock retained by the Company and interest payments with respect to a loan to the Central Federal Savings and Loan Association of Rolla Employee Stock Ownership Plan. Our board of directors has the authority to adopt a policy of paying cash dividends, subject to statutory and regulatory requirements. We cannot guarantee that we will pay dividends or that, if paid, we will not reduce or eliminate the dividend in the future.

(b) Sales of Unregistered Securities. Not applicable.

(c) Use of Proceeds. Not applicable.

(d) Securities Authorized for Issuance Under Equity Compensation Plans. None.

(e) Stock Repurchases. The following table presents information regarding stock repurchases by the Company during the ~~year and~~ quarter ended December 31, ~~2017~~2018. All repurchases were effected pursuant to the repurchase programs announced on ~~April~~June 522, ~~2017~~ 2018 and November 29 27, ~~2017~~2018.

PERIOD	TOTAL NUMBER OF SHARES PURCHASED		AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PLANS OR PROGRAMS		MAXIMUM NUMBER OF SHARES THAT MAY YET BE PURCHASED UNDER THE PLANS OR ~~PROGRAM~~PROGRAMS
October 1, 2017 through October 31, 2017		31,400		13.80		31,400		73,402
October 1, 2018 through October 31, 2018		11,100	$	13.23		11,100		6,902
November 1, 2017 through November 30, 2017		-		-		-		-
November 1, 2018 through November 30, 2018		10,200	$	13.36		10,200		70,096
December 1, 2017 through December 31, 2017		6,700		14.00		6,700		66,702
December 1, 2018 through December 31, 2018		13,000	$	13.53		5,000		57,096

(f) Stock Performance Graph. Not required for smaller reporting companies.

Item 6. Selected Financial Data

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company is a holding company that owns 100% of Central Federal. Central Federal is a community-oriented financial institution founded in 1952, dedicated to serving the financial service needs of customers within its market area, which generally consists of Phelps County, Missouri, although it also services customers in the contiguous Missouri countries of Dent, Texas, Crawford, Pulaski and Maries. We currently operate out of our office in Rolla, Missouri.

We offer a variety of loan and deposit products to meet the borrowing needs of our customers. Our real estate loans consist primarily of residential loans, including owner-occupied and non-owner occupied one-to four-family residential loans. We also offer commercial and multi-family real estate loans, commercial business loans and consumer loans, including automobile and recreational vehicle loans. We are subject to extensive regulation, examination and supervision by the OCC, our primary federal regulator, and the FDIC, our deposit insurer.

We will continue to explore ways to service our customers and their needs in order to be a full service banking institution. The results of our operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on interest-earning assets, primarily loans, and interest we pay on interest-bearing liabilities, consisting of deposits. The interest income we generate is based on the origination of commercial, mortgage and consumer loans. Our primary source of funding is deposits. The largest expenses we incur are associated with salaries and related employee benefits. It is critical for Central Federal to maintain appropriate regulatory leverage and risk-based capital ratios.

Operating Strategy

Building on our strengths as a community-oriented financial institution. We have operated continuously as a community-oriented financial institution since we were founded in 1952. We are committed to meeting the financial needs of our local community and are dedicated to providing quality personal service to our customers. In that regard, we are focused on building our customer base in the communities we serve through the enhancement of our products and additional marketing of these products and services. Further, we have provided our customers the opportunity to become shareholders through our stock offering.

Increasing loan production while maintaining our asset quality. Our loan portfolio has slightly declined over the past few years in our very competitive market area. Through additional marketing and perhaps the addition of more lending personnel, we hope to grow our loan portfolio. In growing the loan portfolio, we will seek to maintain strong asset quality by following prudent underwriting guidelines and utilizing our knowledge of our local market area.

Strengthening our capital to protect against rising interest rates. We currently have a strong capital base which is sufficient for interest rate risk purposes in the current low interest rate environment given our interest rate risk profile. We know if interest rates rise, having a strong capital base will provide us with additional strength to withstand the impact of rising interest rates. Further, the cash generated from the conversion could be used to fund loans or purchase investment securities at higher interest rate levels should interest rates rise, providing additional net interest income.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for loan losses, valuation of foreclosed assets, and valuation of deferred tax assets.

Allowance for Loan Losses. The allowance for loan losses is an estimate made by management as necessary to cover probable losses inherent in the loan portfolio at the balance sheet date. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged-off against the allowance when Central Federal determines the loan balance to be uncollectible. Cash received on previously charged-off amounts is recorded as a recovery to the allowance. Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions, and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, Central Federal’s primary regulator may require additions to the allowance based on their judgment about information available at the time of their examinations. The regulatory agency is not, however, directly involved in the determination of the allowance for loan losses, and any decisions to increase or decrease the allowance for loan losses are the responsibility of Central Federal’s management.

Foreclosed Assets. Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets held for sale are carried at the lower of the new cost basis or fair value less costs to sell. This evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values will occur in the near term and that such changes could materially affect the amounts reported in our financial statements.

Deferred Tax Assets. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax liabilities.

The Company maintains significant net deferred tax assets for deductible temporary differences, the largest of which relates to the Company’s contribution to establish the Central Federal Community Foundation. Under U.S. generally accepted accounting principles, a valuation allowance is required to be recognized if it is “more likely than not” that the deferred tax assets will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon management’s judgment and evaluation of both positive and negative evidence, including the forecasts of future income, tax planning strategies and assessments of the current and future economic and business conditions. The Company considers both positive and negative evidence regarding the ultimate realizability of the deferred tax assets. Positive evidence includes the ability to implement tax planning strategies to accelerate taxable income recognition and the probability that taxable income will be generated in future periods. Negative evidence includes the continued expenses related to operating as a publicly traded company, current financial performance, and the general business and economic trends.

In connection with the offering of common stock, the Company contributed to the Central Federal Community Foundation $100,000 in cash and common stock with a fair value of approximately $688,000 (68,770 shares at the $10.00 offering price) for a total contribution of approximately $788,000. For Federal income tax purposes, the deduction for charitable contributions is limited to a maximum of 10% of taxable income before charitable contributions, net operating losses and dividends received deductions. We are permitted, under the Internal Revenue Code, to carry the excess contribution over the five-year period following the contribution to the charitable foundation, subject to the 10% annual limitation.

We may not have sufficient taxable income to be able to fully deduct the contribution in the year in which it is made or during the five-year carryover period permitted under the Internal Revenue Code. We estimate we will not be able to fully utilize the carryover and, we established a valuation allowance related to the entire deferred tax asset related to the contribution as it is not deemed to be realizable. This determination was based primarily upon the effect of anticipated costs related to operation as a publicly traded company and their effect on future taxable income. The creation of the valuation allowance does not have an effect on the Company’s cash flows and may be recoverable in subsequent periods if the Company were to realize certain sustainable future taxable income. It is possible that future conditions may differ substantially from those anticipated in determining the need for a valuation allowance on deferred tax assets and adjustments may be required in the future.

Determining the ultimate settlement of any tax position requires significant estimates and judgements in arriving at the amount of tax benefits to be recognized in the financial statements. It is possible that the tax benefits realized upon the ultimate resolution of a tax position may result in tax benefits that are significantly different from those estimated.

Results of Operations for the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

Overview. We had a net ~~loss~~income of $935,000 for the year ended December 31, ~~2017~~2018 as compared to a net loss of $~~873~~9,000 for the year ended December 31, ~~2016~~2017. Net interest income increased $84119,000 and noninterest expense ~~decreased~~increased $~~839~~5,000. The $~~864~~44,000, or 99488.09%, ~~decrease~~increase in net ~~loss~~income between the years was primarily a result of the ~~foundation~~increase ~~charitable~~in ~~contribution~~net interest income and the reduction of ~~professional~~ professional fees.

Net Interest Income. The following table presents a summary of net interest income before provision for loan losses.

Year Ended December 31, (Dollars in thousands)	~~2017~~2018		~~2016~~2017		Increase (Decrease)			% Change
Components of net interest income
Loans, Including Fees	$	2,~~217~~395	$	2,~~240~~217	$	~~(23~~178	)		-18.03	%
Securities and Other		~~268~~249		~~233~~268		35(19	)		15-7.0209	%
Total interest income	$	2,~~485~~644	$	2,~~473~~485	$	12159			06.4940	%
Deposits		~~287~~327		~~359~~287		~~(72~~40	)		~~-20~~13.0694	%
Total interest expense		~~287~~327		~~359~~287		~~(72~~40	)		~~-20~~13.0694	%
Net interest income	$	2,~~198~~317	$	2,~~114~~198	$	84119			35.9741	%

Net interest income increased by $84119,000, or 45.04%, to $2~~,198,000~~.3 million for the year ended December 31, ~~2017~~2018 from $2~~,114,000~~.2 million for the year ended December 31, ~~2016~~2017. ~~Although~~Interest ~~interest~~ income on loans ~~decreased~~increased by $23178,000 from the year ended December 31, ~~2016~~2017, to the year ended December 31, ~~2017~~2018, primarily due to loan growth, while the interest income generated by the investment portfolio decreased ~~increased~~ $3519,000 over the prior year, and interest expense ~~decreased~~increased by $7240,000 during that same period. Securities and other interest income consists of interest on bank accounts, securities available for sale, certificates of deposit, municipal obligations, federal funds sold and dividends on Federal Home Loan Bank Stock.

The ~~decrease~~increase in interest ~~income~~expense on ~~loans~~deposits iswas primarily due to the increase in volume and rate on certificate of deposit accounts. The average balance of certificates of deposit increased by $1.2 million as a result of a certificate of deposit promotion, and the ~~collection~~average balance of interest-bearing DDA accounts decreased by $36766,000 inprimarily ~~nonaccrual~~due ~~interest~~to inthe ~~December~~transfer ~~2016~~of funds to a certificate of deposit account.

The decrease in interest expense on deposits was primarily due to a decrease in the volume of deposits. The average balance of certificates of deposit decreased by $4.8 million due to the maturity of certificates of deposit from other financial institutions, and the average balance of interest-bearing DDA accounts decreased by $6.7 million. This change in deposit mix contributed to a further decline in deposit costs.

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the years indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the years presented. Average balances have been calculated using daily balances, and non-accrual loans are included in average balances only. Loan fees are included in interest income on loans and are insignificant. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

	Year Ended December 31,
	2018									2017
	Average			Interest and						Average			Interest and
	Balance			Dividends			Yield/Cost			Balance			Dividends			Yield/Cost
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net of fees	$	54,471		$	2,395			4.40	%	$	51,331		$	2,217			4.32	%
Securities and other interest bearing assets (1)		12,408			249			2.01	%		17,326			268			1.55	%
Total interest-earning assets		66,879			2,644			3.95	%		68,657			2,485			3.62	%
Non-interest-earning assets		2,110									2,353
Allowance for loan losses		(252	)								(263	)
Total assets	$	68,737								$	70,747

Interest-bearing liabilities:
Certificate of deposit	$	16,174			213			1.32	%	$	15,003			171			1.14	%
Savings		3,865			12			0.31	%		3,777			12			0.32	%
Money Market		9,723			53			0.55	%		9,606			52			0.54	%
Interest-bearing DDA		9,599			49			0.51	%		10,365			52			0.50	%
Total interest-bearing deposits		39,361			327			0.83	%		38,751			287			0.74	%
Non-interest-bearing deposits		3,020									4,324
Other non-interest-bearing liabilities		367									334
Total liabilities		42,748									43,409
Total equity		25,989									27,338
Total liabilities and equity	$	68,737								$	70,747

Net interest income				$	2,317								$	2,198
Net interest rate spread (2)								3.12	%								2.88	%
Net interest-earning assets (3)	$	27,518								$	29,906
Net interest margin (4)					3.46	%								3.20	%
Ratio of average interest-earning assets to average interest-bearing liabilities		169.9	%								177.2	%

(1)	Includes municipal obligations with an average balance and interest income of $405,000 and $12,000, respectively.

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

(3)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(4)	Net interest margin represents net interest income divided by total interest-earning assets.

	Year Ended December 31,
	2017									2016
	Average			Interest and						Average			Interest and
	Balance			Dividends			Yield/Cost			Balance			Dividends			Yield/Cost
Interest-earning assets:		(Dollars in thousands)
Loans receivable, net of fees	$	51,331		$	2,217			4.32	%	$	49,928		$	2,240			4.49	%
Securities and other interest bearing assets (1)		17,326			268			1.55	%		21,359			233			1.09	%
Total interest-earning assets		68,657			2,485			3.62	%		71,287			2,473			3.47	%
Non-interest-earning assets		2,353									2,717
Allowance for loan losses		(263	)								(263	)
Total assets	$	70,747								$	73,741
Interest-bearing liabilities:
Certificate of deposit	$	15,003			171			1.14	%	$	19,789			238			1.20	%
Savings		3,777			12			0.32	%		3,454			11			0.32	%
Money Market		9,606			52			0.54	%		9,052			49			0.54	%
Interest-bearing DDA		10,365			52			0.50	%		17,050			61			0.36	%
Total interest-bearing deposits		38,751			287			0.74	%		49,345			359			0.73	%
Non-interest-bearing deposits		4,324									5,141
Other non-interest-bearing liabilities		334									29
Total Liabilities		43,409									54,515
Total equity		27,338									19,226
Total liabilities and equity	$	70,747								$	73,741
Net interest income				$	2,198								$	2,114
Net interest rate spread (2)								2.88	%								2.74	%
Net interest-earning assets (3)	$	29,906								$	21,942
Net interest margin (4)					3.20	%								2.97	%
Ratio of average interest-earning assets to average interest-bearing liabilities		177.2	%								144.5	%

Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of changes in each. The following table presents the rate volume analysis for the year ended December 31, 2018.

(1)	Includes municipal obligations with an average balance and interest income of $412,000 and $12,000, respectively.
		Year Ended December 31, 2018 vs. 2017
(2)	Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
		Increase (Decrease) due to					Total Increase
(3)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
		Volume			Rate		(Decrease)
(4)	Net interest margin represents net interest income divided by total interest-earning assets.
		(In thousands)
Interest-earning assets:
Loans		$	138		$	40	$	178
Other interest-earning assets			(87	)		68		(19	)
Total interest-earning assets			51			108		159
Interest-bearing liabilities:
Certificate of deposit			14			28		42
Savings			-			-		-
Money Market			-			1		1
Interest-bearing DDA			(4	)		1		(3	)
Total interest-bearing liabilities			10			30		40
Change in net interest income		$	41		$	78	$	119

Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. Changes attributable to changes in both rate and volume have been allocated proportionally based on the absolute dollar amounts of changes in each. The following table presents the rate volume analysis for the year ended December 31, 2017 and 2016.

	Year Ended December 31, 2017 vs. 2016
	Increase (Decrease) due to						Total Increase
	Volume			Rate			(Decrease)
	(In thousands)
Interest-earning assets:
Loans	$	62		$	(85	)	$	(23	)
Other Interest- Earning Assets		(50	)		85			35
Total interest-earning assets		12			-			12
Interest-bearing liabilities:
Certificate of deposit		(55	)		(12	)		(67	)
Savings		1			-			1
Money Market		3			-			3
Interest-bearing DDA		(29	)		20			(9	)
Total interest-bearing liabilities		(80	)		8			(72	)
Change in net interest income	$	92		$	(8	)	$	84

Provision for Loan Losses. We maintain an allowance for loan losses at a level necessary to absorb management’s best estimate of probable loan losses in the portfolio. Management reviews the level of the allowance for loan losses on a quarterly basis based on a variety of factors. Management considers, among other factors, historical loss experience, type and amount of loans, borrower concentrations and current conditions of the economy. In addition, the allowance considers the level of loans which management monitors as a result of inconsistent repayment patterns. Such loans carry a higher degree of credit risk than our historical single-family lending.

Management also reviews individual loans for which full collectability may not be reasonably assured and considers, among other matters, the estimated fair value of the underlying collateral. This evaluation is ongoing and results in variations in our provision for loan losses.

We had a provision for loan losses of $925,000 for the year ended December 31, ~~2017;~~2018, ~~there~~compared ~~was~~to noa ~~such~~ provision for loan losses of $9,000 for the year ended December 31, ~~2016~~2017. Net loan ~~recoveries~~charge-offs amounted to $116,000 during the year ended December 31, ~~2017~~2018, compared to net recoveries of $21,000 during the year ended December 31, ~~2016~~2017.

Although management utilizes its best judgment in providing for losses, there can be no assurance that they will not have to change its allowance for loan losses in subsequent periods. The allowance for loan losses reflects the estimate we believe to be appropriate to cover incurred probable losses in the loan portfolio at December 31, ~~2017~~2018. While we believe the estimates and assumptions used in our determination of the adequacy of the allowance are reasonable, such estimates and assumptions could be proven incorrect in the future, and the actual amount of future provisions may exceed the amount of past provisions, and the increase in future provisions that may be required may adversely impact our financial condition and results of operations. In addition, our primary regulator may comment during an examination on the provision for loan losses or the recognition of further loan charge-offs. The regulatory agency is not, however, directly involved in the determination of the allowance for loan losses, and any decisions to increase or decrease the allowance for loan losses are the responsibility of Central Federal’s management. Management will continue to monitor the allowance for loan losses and make additional provisions to the allowance as appropriate.

An analysis of the changes in the allowance for loan losses, non-performing loans and classified loans is presented under “Allowance for Loan Losses, Analysis of Non-Performing Assets and Troubled Debt Restructurings,” and “Classified Assets” below.

Noninterest Income. Total noninterest income ~~increased~~decreased by $424,000 during the year ended December 31, ~~2017~~2018 as compared to the year ~~ended~~ ended December 31, ~~2016~~2017. ~~This~~The ~~was~~decrease ais ~~result~~primarily ofdue ~~customer~~to ~~service~~recognizing ~~fees~~the ~~decreasing~~change byin ~~$3,000~~fair ~~and~~value ~~other~~of ~~noninterest~~the ~~income~~equity ~~increasing~~securities byin ~~$7,000~~2018 because of the implementation of FASB ASU 2016-01.

	2017		2016		Increase (Decrease)			% Change
Customer service fees	$	89	$	92	$	(3	)		(3.26	)
Other income		25		18		7			38.89
Total	$	114	$	110	$	4			3.64

Noninterest Expenses. Total noninterest expenses decreased by $839,000, or 26.6%, for the year ended December 31, 2017, compared to the year ended December 31, 2016. The decrease primarily was attributable to a $788,000 contribution made to the Central Federal Community Foundation during the year ended December 31, 2016. Legal and professional services expense decreased by $159,000 from year to year due to our hiring a Chief Financial Officer in mid-2016.

	2018			2017		Increase (Decrease)			% Change
	(Dollars in thousands)
Customer service fees	$	92		$	89	$	3			3.37
Unrealized Gain (Loss) on Equity Securities	$	(22	)	$	-	$	(22	)		100.00
Other income		20			25		(5	)		(20.00	)
Total	$	90		$	114	$	(24	)		(21.05	)

Year Ended December 31, (Dollars in thousands)	2017			2016		Increase (Decrease)			% Change
Compensation and employee benefits	$	1,278		$	1,115	$	163			14.62	%
Data Processing and other outside services		341			339		2			0.59	%
FDIC insurance and regulatory assessmenet		55			72		(17	)		(23.61	)
Occupancy and Equipment		188			178		10			5.62
Legal and Professional Services		315			474		(159	)		-33.54	%
Supplies, Telephone, and Postage		48			48		-			0.00	%
Operations of Foreclosed Assets		(16	)		41		(57	)		-139.02	%
Contribution to Charitable Foundation		-			788		(788	)		-100.00	%
Other		108			101		7			6.93	%
Total	$	2,317		$	3,156	$	(839	)		-26.58	%

Noninterest Expenses. Total noninterest expenses increased by $5,000, or 0.22%, for the year ended December 31, 2018, compared to the year ended December 31, 2017. The minimal increase in noninterest expense was primarily due to the increase in operations of foreclosed assets. While noninterest expenses for compensation and employee benefits and occupancy and equipment also increased, there were reductions in several other noninterest expense categories to offset those increases.

Income Tax Expense (Benefit). We had an income tax benefit of $5,000 for the year ended December 31, 2017, compared to an income tax benefit of $59,000 for the year ended December 31, 2016. This is due to a loss before income taxes of $14,000 for the year ended December 31, 2017, compared to a loss before income taxes of $932,000 during the same period in 2016. In 2016, we established a valuation allowance of $236,000 on the entire deferred tax asset related to the contribution to the Central Federal Community Foundation of $788,000 as it is not deemed to be realizable.

Year Ended December 31, (Dollars in thousands)	2018		2017			Increase (Decrease)			% Change
Compensation and employee benefits	$	1,319	$	1,278		$	41			3.21	%
Data Processing and other outside services		333		341			(8	)		-2.35	%
FDIC insurance and regulatory assessmenet		52		55			(3	)		-5.45	%
Occupancy and Equipment		206		188			18			9.57	%
Legal and Professional Services		242		315			(73	)		-23.17	%
Supplies, Telephone, and Postage		37		48			(11	)		-22.92	%
Operations of Foreclosed Assets		29		(16	)		45			281.25	%
Other		104		108			(4	)		-3.70	%
Total	$	2,322	$	2,317		$	5			0.22	%

Income Tax Expense (Benefit). We had an income tax expense of $25,000 for the year ended December 31, 2018, compared to an income tax benefit of $5,000 for the year ended December 31, 2017. This is due to income before taxes of $60,000 for the year ended December 31, 2018, compared to a loss before income taxes of $14,000 during the same period in 2017. In 2016, we established a valuation allowance of $236,000 on the entire deferred tax asset related to the contribution to the Central Federal Community Foundation of $788,000 as it is not deemed to be realizable.

Balance Sheet Analysis as of December 31, 2018 and December 31, 2017

Total Assets. At December 31, 2018, total assets were $69.2 million, an increase of $1.1 million, or 1.6%, from total assets of $68.1 million at December 31, 2017. The increase in total assets for the year ended December 31, 2018 was due mainly to the net effect of a $1.8 million, or a 62.1%, increase in cash and cash equivalents due to a deposit increase of $2.1 million, or 5.2%, while investments decreased by $3.5 million, or 29.4%, and loans increased by $2.6 million, or 4.9%, during the year ended December 31, 2018.

Loans. The largest portion of our loan portfolio consists of residential real estate loans which totaled $32.8 million, or 59.8%, and $33.8 million, or 64.6%, of the total loan portfolio at December 31, 2018 and 2017, respectively. Residential real estate loans decreased by $979,000, or 2.9%, during the year ended December 31, 2018.

Commercial and multi-family real estate loans totaled $19.5 million and represented 35.6% of total loans at December 31, 2018. This is an increase of $3.0 million, or 18.2%, from $16.5 million, or 31.6% of total loans, at December 31, 2017. The market area served by Central Federal is very competitive and interest rate sensitive. Commercial real estate loans generally consist of loans secured by multi-family residential rentals, retail stores, and other commercial real estate.

Commercial business loans totaled $1.7 million and $1.3 million, comprising 3.1% and 2.5% of the total loan portfolio at December 31, 2018 and 2017, respectively. Commercial business loans increased $373,000, or 29.0%, during the year ended December 31, 2018.

Consumer and other loans increased by $156,000, or 22.8%, from $683,000 at December 31, 2017 to $839,000 at December 31, 2018.

Balance Sheet Analysis as of December 31, 2017 and December 31, 2016

Total Assets. At December 31, 2017, total assets were $68.1 million, a decrease of $5.9 million, or 8.0%, from total assets of $74.0 million at December 31, 2016. The decrease in total assets for the year ended December 31, 2017 was due mainly to the net effect of a $9.3 million, or a 76.2%, decrease in cash and cash equivalents due to deposit runoff of $4.6 million, or 9.9%, while investments increased by $626,000 and loans increased by $2.7 million, or 5.5%, during the year ended December 31, 2017.

Loans. The largest portion of our loan portfolio consists of residential real estate loans which totaled $33.8 million, or 64.6%, and $33.0 million, or 66.6%, of the total loan portfolio at December 31, 2017 and 2016, respectively. Residential real estate loans increased by $754,000, or 2.3%, during the year ended December 31, 2017.

Commercial and multi-family real estate loans totaled $16.5 million and represented 31.6% of total loans at December 31, 2017. This is an increase of $2.1 million, or 14.4%, from $14.4 million, or 29.2% of total loans, at December 31, 2016. The market area served by Central Federal is very competitive and interest rate sensitive. Commercial real estate loans generally consist of loans secured by multi-family residential rentals, retail stores, and other commercial real estate.

Commercial business loans totaled $1.3 million and $1.5 million, comprising 2.5% and 3.1% of the total loan portfolio at December 31, 2017 and 2016, respectively. Commercial business loans decreased $258,000, or 16.7%, during the year ended December 31, 2017.

Consumer and other loans increased by $125,000, or 22.4%, from $558,000 at December 31, 2016 to $683,000 at December 31, 2017.

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio at the dates indicated.

	December 31, 2017						December 31, 2016
	December 31, 2018						December 31, 2017
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial Business	$	1,~~285~~658			23.51	%	$	1,~~543~~285			32.15	%
Commercial and Multi-Family Real Estate		1619,~~503~~514			3135.6	%		1416,~~428~~503			2931.26	%
Residential Real Estate		3332,~~753~~774			6459.68	%		3233,~~999~~753			6664.6	%
Consumer and Other		~~683~~839			1.35	%		~~558~~683			1.13	%
Total Loans		5254,~~224~~785			100.0	%		4952,~~528~~224			100.0	%
Allowance for loan losses		(~~273~~282	)					(~~263~~273	)
Net deferred loan fees		(1410	)					(1714	)
Net Loans	$	5154,~~937~~493					$	4951,~~248~~937

Loan Maturity. The following table summarizes the scheduled repayments of our loan portfolio at December 31, ~~2017~~2018. Demand loans, loans having no stated repayment schedule or maturity and overdraft loans are reported as being due in one year or less. Actual maturities may differ due to prepayments.

	Commercial Business		Commercial and Multi- Family Real Estate		Residential Real Estate		Consumer and Other		Total Loans
	(In thousands)
As of December 31, 2017
Due in One Year or Less	$	887	$	1,857	$	1,551	$	88	$	4,383
Due in One Year or Less	$	781	$	1,580	$	1,061	$	98	$	3,520
Due after One through Five Years		493		4,811		4,569		705		10,578
Due after One through Five Years		175		520		587		552		1,834
Due after Five Years		278		12,846		26,654		46		39,824
Due after Five Years		329		14,403		32,105		33		46,870
	$	1,658	$	19,514	$	32,774	$	839	$	54,785
	$	1,285	$	16,503	$	33,753	$	683	$	52,224

22Fixed versus Adjustable Rate Loans. The following table sets forth the dollar amount of all loans at December 31, 2018 that are due after December 31, 2019, and that have either fixed interest rates, or floating or adjustable interest rates. The amounts shown below exclude deferred loan origination fees and deferred loan costs.

Fixed vs Adjustable Rate Loans. The following table sets forth the dollar amount of all loans at December 31, 2017 that are due after December 31, 2018, and that have either fixed interest rates, or floating or adjustable interest rates. The amounts shown below exclude deferred loan origination fees and deferred loan costs.

	Fixed Rates		Floating or Adjustable Rates		Total
				(In thousands)
Secured by Real Estate:
Commercial and Multi-Family	$	9,366	$	8,291	$	17,657
Residential		6,537		24,686		31,223
Other Loans:
Commercial Business		-		771		771
Consumer and Other		751		-		751
Total Loans	$	16,654	$	33,748	$	50,402

	Fixed Rates		Floating or Adjustable Rates		Total
			(In thousands)
Secured by Real Estate:
Commercial and Multi-Family	$	9,122	$	5,801	$	14,923
Residential		10,227		22,465		32,692
Other Loans:
Commercial Business		-		504		504
Consumer and Other		585		-		585
Total Loans	$	19,934	$	28,770	$	48,704

Scheduled contractual principal repayments of loans do not reflect the actual life of such assets. The average life of loans is substantially less than their contractual terms because of prepayments. In addition, due-on-sale clauses on loans generally give us the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells the real property subject to the mortgage and the loan is not repaid. The average life of mortgage loans tends to increase when current mortgage loan market rates are substantially higher than rates on existing mortgage loans and, conversely, decrease when current mortgage loan market rates are substantially lower than rates on existing mortgage loans.

Loan Activity. The following table shows loan activity, consisting of loans originated, loan payoffs and loan charge-offs, for the year indicated.

	Year Ended December 31,
	2017			2016
	2018			2017
	(In thousands)
Total loans at beginning of year	$	4952,~~528~~224		$	5049,~~190~~528
Loans Originated:
Commercial Business		~~241~~431			~~257~~241
Commercial and Multi-Family Real Estate		26,~~967~~963			52,~~378~~967
Residential Real Estate		54,~~828~~264			65,~~495~~828
Consumer and Other		~~626~~613			~~370~~626
Total loans originated		912,~~662~~271			129,~~500~~662
Deduct:
Loans principal repayment (amortization and payoffs)		(69,~~962~~688	)		(136,~~161~~962	)
Charge-offs		(422	)		(14	)
Net loan activity		2,~~696~~561			~~(662~~2,696	)
Total loans at end of year	$	5254,~~224~~785		$	4952,~~528~~224

Loan originations come from a variety of sources. Our primary sources of loan originations are existing customers, walk-in traffic, advertising and referrals from customers.

We did not sell any loans during the years ended December 31, ~~2017~~2018 and ~~2016~~2017. From time to time we do buy participation loans. We We did not purchase any loans during the year ended December 31, ~~2017~~2018 and ~~2016~~2017.

Allowance for Loan Losses. The allowance for loan losses (allowance) is an estimate of probable loan losses in Central Federal’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged-off against the allowance when Central Federal determines the loan balance to be uncollectible. Subsequent recoveries, if any, are credited to the allowance.

General Allowances. The general component of the loan loss allowance covers non-impaired loans and is based on historical losses adjusted for current qualitative factors. The historical loss component is determined by portfolio segment and is based on the actual loss history experienced by Central Federal over the most recent three years. This is adjusted for qualitative factors based on the risks present for each portfolio segment. These qualitative factors include: (i) changes in the value of underlying collateral; (ii) changes in lending policies and underwriting practices; (iii) national and local economic trends and conditions; (iv) volume and terms of loans; (v) experience, ability and depth of lending management; (vi) changes in past due loans, nonaccrual loans, and credit quality; (vii) changes in loan file review; (viii) changes in credit concentrations and (ix) the impact of competition.

Specific Allowances. The specific component includes allowances for loans that are considered impaired when, based on current information and events, it is probable that Central Federal will be unable to collect the scheduled payments and principal or interest under the contractual terms of the loan agreement. Central Federal measures individual impairment based on the present value of expected future cash flows discounted at the original contractual interest rate, except that as a practical expedient, it may measure impairment based on an observable market price, or the fair value of the collateral, if collateral dependent. A loan is collateral dependent if the repayment is expected to be provided solely by the underlying collateral.

Unallocated Allowances. Allowances other than general and specific allocations are included in the unallocated portion of the loan loss allowance. The unallocated allowance reflects the imprecision inherent in the underlying assumptions used in the methodologies for estimating the general allowance.

At December 31, ~~2017~~2018, the allowance was $~~273~~282,000 and represented 0.5251% of total loans. At December 31, ~~2016~~2017, the allowance was $~~263~~273,000 and represented 0.5352% of total loans. At December 31, ~~2017~~2018, the largest allowance in the portfolio was the allowance for residential real estate loans which made up about 8061.67% of the total allowance at $~~220~~174,000, and at December 31, ~~2016~~2017, the largest allowance in the portfolio was the allowance for residential real estate loans which made up about 6880.96% of the total allowance at $~~181~~220,000.

The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated. The allocation of the allowance to each category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in each category.

	December 31, 2017								December 31, 2016
	December 31, 2018								December 31, 2017
	Amount		Percent of Allowance to Total Allowance			Percent of Loans in Category to Total Loans			Amount		Percent of Allowance to Total Allowance			Percent of Loans in Category to Total Loans
	(Dollars in thousands)								(Dollars in thousands)
Commercial Business	$	34		1.14	%		23.51	%	$	3		1.1	%		32.15	%
Commercial and Multi-Family Real Estate		3881		1328.98	%		3135.6	%		3738		1413.19	%		2931.26	%
Residential Real Estate		~~220~~174		8061.67	%		6459.68	%		~~181~~220		6880.96	%		6664.6	%
Consumer and Other		34		1.14	%		1.35	%		3		1.1	%		1.13	%
Total allocated allowance		~~264~~263		9693.73	%		100.0	%		~~224~~264		8596.27	%		100.0	%
Unallocated allowance		919		36.37	%					399		143.83	%
Total allowance for loan loss	$	~~273~~282		100.0	%		100.000	%	$	~~263~~273		100.0	%		100.000	%

At December 31, ~~2017~~2018, our allowance for loan losses of $~~273~~282,000 was ~~270~~89.32% of non-performing loans. At December 31, ~~2016~~2017, our allowance for loan losses of $~~263~~273,000 was ~~132~~270.23% of non-performing loans.

Although we believe that we use the best available information to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted.

Furthermore, while we believe we have established our allowance for loan losses in accordance with generally accepted accounting principles and have taken into account the views of regulators and the current economic environment, there can be no assurance that in the future Central Federal’s regulators will not require further increases in the allowance. The regulatory agency is not, however, directly involved in the determination of the allowance for loan losses, and any decisions to increase or decrease the allowance for loan losses are the responsibility of Central Federal’s management. Any material increases in the allowance for loan losses may adversely affect our financial condition and results of operation.

Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the years indicated.

	Year Ended
	December 31,
	2018			2017
	(Dollars in thousands)
Allowance at beginning of year	$	273		$	263
Charge-offs:
Residential real estate		(22	)		-
Consumer and other		-			(4	)
Total charge-offs		(22	)		(4	)
Recoveries		6			5
Net recoveries (charge-offs)		(16	)		1
Provision for loan losses		25			9
Allowance at end of year	$	282		$	273

Ratios:
Net charge-offs to average loans outstanding		0.03	%		0.00	%
Allowance for loan losses to non-performing loans at end of year		89.2	%		270.3	%
Allowance for loan losses to total loans at end of year		0.51	%		0.52	%

~~Analysis~~For the year ended December 31, 2018, the allowance increased by $9,000 to $282,000, as compared to an increase of ~~Loan~~$10,000 ~~Loss~~to ~~Experience~~$273,000 during the same period in 2017. The increase for the year ended December 31, 2018 was due to $22,000 in charge-offs offset with $6,000 in recoveries, as well as $25,000 in provision for loan losses. Charge-offs were $22,000 in residential real estate loans in 2018. In 2017, the largest charge-off was for $4,000. The allowance for loan losses to non-performing loans ratio decreased due to an increase in non-performing loans to $316,000 as of December 31, 2018 from $101,000 as of December 31, 2017. The allowance for loan loss as a percentage of total loans as of December 31, 2018 decreased by 0.01% to 0.51% compared to 0.52% as of December 31, 2017.

The following table sets forth an analysis of the allowance for loan losses for the years indicated.

	Year Ended
	December 31,
	2017			2016
	(Dollars in thousands)
Allowance at beginning of year	$	263		$	261
Charge-offs:
Residential real estate		-			-
Consumer and other		(4	)		(1	)
Total charge-offs		(4	)		(1	)
Recoveries		5			3
Net recoveries (charge-offs)		1			2
Provision for loan losses		9			-
Allowance at end of year	$	273		$	263
Ratios:
Net charge-offs to average loans outstanding		0.00	%		0.00	%
Allowance for loan losses to non-performing loans at end of year		270.3	%		132.2	%
Allowance for loan losses to total loans at end of year		0.52	%		0.53	%

For the year ended December 31, 2017, the allowance increased by $10,000 to $273,000, as compared to an increase of $2,000 to $263,000 during the same period in 2016. The increase for the year ended December 31, 2017 was due to $4,000 in charge-offs offset with $5,000 in recoveries, as well as $9,000 in provision for loan losses. Charge-offs were minimal in 2017 with the largest category of charge-offs being $4,000 in consumer loans. In 2016, the largest charge-off was for $1,000. The allowance for loan losses to non-performing loans ratio increased due to a decrease in non-performing loans to $101,000 as of December 31, 2017 from $199,000 as of December 31, 2016. The allowance for loan loss as a percentage of total loans as of December 31, 2017 decreased by 0.01% to 0.52% compared to 0.53% as of December 31, 2016.

Delinquencies. The following table provides the information about delinquencies in our loan portfolio at the dates indicated.

	Loans Delinquent For
	30 - 89 Days				90 Days or More				Total
	Number		Amount		Number		Amount		Number		Amount
	(Dollars in thousands)
At December 31, 2017
At December 31, 2018
Commercial and Multi-Family Real Estate		-	$	-		-	$	-		-	$	-
Residential Real Estate		8		284		2		134		10		418
Consumer and Other		-		-		-		-		-		-
Total		8	$	284		2	$	134		10	$	418
At December 31, 2017	(Dollars in thousands)
Commercial and Multi-Family Real Estate		-	$	-		-	$	-		-	$	-
Residential Real Estate		8		306		1		71		9		377
Consumer and Other		-		-		-		-		-		-
Total		8	$	306		1	$	71		9	$	377
	(Dollars in thousands)
At December 31, 2016
Commercial and Multi-Family Real Estate		-	$	-		-	$	-		-	$	-
Residential Real Estate		3		182		2		170		5		352
Consumer and Other		2		2		-		-		2		2
Total		5	$	184		2	$	170		7	$	354

As of December 31, ~~2017~~2018, there were eight loans delinquent between 30-89 days which totaled $~~306~~284,000. This is ana ~~increase~~ decrease from the eight ~~five~~ loans delinquent for 30-89 days as of December 31, ~~2016~~2017, which totaled $~~184~~306,000. There was aan ~~decrease~~increase in loans delinquent for 90 days or more from ~~two~~one ~~loans~~loan totaling $~~170~~71,000 as of December 31, ~~2016~~2017 to ~~one~~two ~~loan~~loans oftotaling $71134,000 as of December 31, ~~2017~~2018.

Managing risk is an essential part of successfully managing a financial institution. Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan when it is due. Interest rate risk is the potential reduction of interest income and/or the potential increase of interest expense as a result of changes in interest rates. Market risk reflects changes in the value of collateral underlying loans receivable and the valuation of real estate held by Central Federal. Other risks that we face are operational risk, liquidity risks and reputation risk. Operational risks include risks related to fraud, regulatory compliance, processing errors, technology, use of third-party vendors and disaster recovery. Liquidity risk is the possible inability to fund obligations to depositors, lenders or potential borrowers. Reputation risk is the risk that negative publicity or press, whether true or not, could cause a decline in our customer base or income.

Analysis of Non-Performing Assets and Troubled Debt Restructurings. We consider foreclosed assets, which are assets repossessed by Central Federal, accruing loans 90 days or more past due and non-accrual loans to be non-performing assets. Assets acquired through, or in lieu of, loan foreclosure are considered foreclosed assets and are held for sale. These assets are initially recorded at fair value less estimated selling costs at the date of foreclosure, which establishes a new cost basis for those assets. Any write-downs based on the asset’s fair value at the date of foreclosure, or subsequent to the date of foreclosure, are charged to the allowance for loan losses. The assets held for sale are carried at the lower of the new cost basis or fair value less costs to sell.

Loans are generally placed on non-accrual status when the collectability is considered to be uncertain or payments have become more than 90 days or more delinquent, unless the credit is well-secured and in process of collection. In some cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. ~~Credit card loans~~Personal ~~and other personal~~ loans are typically charged off no later than 180 days past due. As of December 31, ~~2017~~2018, there ~~was~~were ~~one~~three ~~loan~~loans on non-accrual status totaling $30182,000, which is aan ~~decrease~~increase of $~~169~~152,000 from the ~~three~~one ~~loans~~loan on non-accrual status amounting to $~~199~~30,000 as of December 31, ~~2016~~2017. Non-accrual loans for those periods represented .13% and .41% of total loans, respectively.

Under certain circumstances, Central Federal will provide borrowers relief through loan restructuring. A restructuring of debt constitutes a TDR if Central Federal, for economic or legal reasons related to the borrower’s financial situation, grants a concession to the borrower that it would not otherwise have considered. Loans that are reported as TDRs are considered impaired and measured for impairment. Depending on the individual facts and circumstances of the borrower, restructuring loans can involve loans remaining in full nonaccrual, moving to nonaccrual or continuing on accrual status.

The following table provides information with respect to our non-performing assets and accruing troubled debt restructurings at the dates indicated.

	December 31,
	2017				2016
	2018			2017
	(Dollars in thousands)
Non-accrual loans:
Residential real estate	$	30182			$	~~199~~30
Total		30182				~~199~~30
Accruing loans 90 days or more past due:
Residential real estate	$	71134			$	-71
Total non-performing loans		~~101~~316				~~199~~101
Real estate owned		-143				26—
Total non-performing assets	$	~~101~~459			$	~~225~~101
Trouble debt restructurings (TDR)		-				-
Total non-performing and troubled debt restructurings	$	~~101~~459			$	~~225~~101
Ratios:
Total non-performing loans to total loans		0.1958	%			0.4019	%
Total non-performing assets to total assets		0.1566	%			0.3015	%
Total non-performing loans and TDRs to total loans		0.1958	%			0.4019	%
Total non-performing assets and TDRs to total assets		0.1566	%			0.3015	%

Total non-performing loans ~~decreased~~increased by $98215,000 from $~~199~~101,000 at December 31, ~~2016~~2017 to $~~101~~316,000 at December 31, ~~2017~~2018. ~~The~~This ~~majority~~was ofprimarily ~~this~~due ~~change~~to ~~was~~an increase in residential real estate past due, tothree ~~one~~loans ~~loan~~being transferred to ~~foreclosed assets~~nonaccrual status during the year, and the delayed payoff of the $134,000 in accruing loans 90 days or more past due, which occurred in January 2019.

26There were two foreclosed assets at December 31, 2018, which is an increase from no foreclosed property at December 31, 2017. Both foreclosed properties are under contract to sell in the first quarter of 2019. One additional property is scheduled for foreclosure in the first quarter of 2019 for which the loan total is $68,000 and no loss is expected.

There were no foreclosed assets at December 31, 2017, which is a decrease from the one foreclosed property at December 31, 2016, which totaled $26,000. The decline in the total amount of foreclosed assets is due to two properties being sold. The first sale was for a property sold in Rolla, Missouri for $37,000, resulting in a gain of $11,000. The second sale was a property sold in St. James, Missouri for $94,000, at a gain of $11,000.

The following table provides information with respect to partial charge-offs on non-performing loans and accruing troubled debt restructurings at the dates indicated.

	December 31,
	2017				2016
	2018			2017
	(Dollars in thousands)
Gross non-performing loans	$	~~103~~316			$	~~199~~103
Less partially charged off non-performing loans		2-				-2
Adjusted non-performing loans	$	~~101~~316			$	~~199~~101
Gross non-performing loans and accruing troubled debt restructurings	$	~~103~~316			$	~~199~~103
Adjusted non-performing loans and accruing troubled debt restructurings	$	~~101~~316			$	~~199~~101
Adjusted non-performing loans to total assets		0.15	%			0.31	%
Adjusted non-performing loans and accruing troubled debt restructurings to total assets		0.15	%			0.31	%
Allowance for loan losses to adjusted non-performing loans and accruing troubled debt restructurings at end of year		~~270~~89.32	%			~~132~~270.23	%

Classified Assets. Central Federal assigns a risk rating to loans and foreclosed assets to identify credit risks and to assess the overall collectability of the assets. These risk ratings are also subject to examination by Central Federal’s regulators. We categorize the assets based on the financial condition of the borrowers, trends in the industries in which the borrower operates and the fair values of collateral securing the loans and foreclosed assets.

Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of Central Federal’s credit position at some future date. Special mention loans are not adversely classified and do not expose Central Federal to sufficient risk to warrant adverse classification. Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well-defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that Central Federal will sustain some loss if the deficiencies are not corrected.

	December 31,
	2017		2016
	2018		2017
	(In thousands)
Special mention	$	~~774~~198	$	~~121~~774
Substandard		~~284~~350		~~613~~284
Total criticized and classfied loans	$	~~1,058~~548	$	~~734~~1,058
Foreclosed assets		-143		26-
Total criticized and classfied assets	$	~~1,058~~691	$	~~760~~1,058

Investment Portfolio. Our board of directors has the overall responsibility for the investment portfolio, including approval of the investment policy. Our primary investment objectives are: (i) to provide and maintain liquidity; (ii) to fully employ the available funds of Central Federal; (iii) to earn an average rate of return on invested funds competitive with comparable institutions; (iv) to manage interest rate risk; and (v) to limit credit and interest rate risk. Our chief executive officer is responsible for the implementation of our policy and monitoring our investment performance. Our board of directors reviews the status of our investment portfolio on a monthly basis.

The following table sets forth the amortized costs and fair values of our available-for-sale securities at the dates indicated.

December 31, 2017

December 31, 2016

December 31, 2018

December 31, 2017

Amortized Cost

Fair Value

Amortized Cost

Fair Value

(In thousands)

Investments available-for-sale:

Mortgage Backed Securities

4,~~994~~163

43,~~883~~975

54,~~321~~994

54,~~182~~883

Small Business Administration Pools

~~916~~840

~~885~~795

~~988~~916

~~954~~885

Municipal Obligation

~~406~~405

~~412~~402

~~407~~406

~~403~~412

Federal Home Loan Mortgage Corp. Stock

4017

4240

65,~~331~~423

65,~~220~~189

6,~~731~~331

6,~~581~~220

At December 31, ~~2017~~2018, our securities available-for-sale consisted of seven mortgage-backed securities and a fully guaranteed Small Business Administration investment, with fair values of $~~4,883,000~~3.9 million and $~~885~~795,000, respectively, one municipal bond backed by a local school district with a fair value of $~~412~~402,000, and Federal Home Loan Mortgage Corporation common stock with a fair ~~value~~ value of $4017,000 for a total of $~~6,220,000~~5.2 million as compared to the December 31, ~~2016~~2017 available-for-sale security portfolio with a fair value of $6~~,581,000~~.2 million.

~~The following table indicates amortized cost and estimated fair value of securities available for-sale at December 31, 2017 based upon contractual maturity.~~27

	Amortized Cost		Fair Value
Over Ten Years	$	406,000	$	412,000
Mortgage Backed Securities and SBA Pools with no stated maturity date		5,910,000		5,768,000
Equity Securities		15,000		40,000
Total	$	6,331,000	$	6,220,000

The following table indicates amortized cost and estimated fair value of securities available-for-sale at December 31, 2018 based upon contractual maturity.

	Amortized Cost		Fair Value
Over Ten Years	$	405,000	$	402,000
Mortgage Backed Securities and SBA Pools with no stated maturity date		5,003,000		4,770,000
Equity Securities		15,000		17,000
Total	$	5,423,000	$	5,189,000

Deposits. Deposits have traditionally been our primary source of funds for use in lending and investment activities. Deposits generally are attracted from within our market area through the offering of a broad selection of deposit instruments, including non-interest-bearing demand deposits (such as checking accounts), interest-bearing demand deposit accounts (such as NOW and money market accounts), statement savings accounts, and certificates of deposit. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit, and the interest rate, among other factors.

Total deposits ~~decreased~~increased by $42.61 million, or 95.92%, from $4641.26 million, or 6261.41% of total assets, at December 31, ~~2016~~2017 to $4143.68 million, or 6163.13% of total assets, at December 31, ~~2017~~2018, primarily ~~from~~due ~~the~~to ~~runoff~~a ofcertificate ~~jumbo wholesale certificates~~ of deposit ~~and the repurchase of stock~~promotion. Interest-~~Bearing~~bearing ~~Demand~~demand deposits ~~Deposits~~ make up the majority of the deposit balance accounting for $2018.53 million, or 4941.28%, and $20.65 million, or 4449.62%, as of December 31, ~~2017~~2018 and ~~2016~~2017, respectively. Noninterest-bearing demand deposits ~~decreased~~ increased by $~~293~~543,000 and savings accounts increased ~~remained~~by ~~consistent~~$290,000.

The following table sets forth the balances of our deposit accounts at the dates indicated.

	December 31, 2017					December 31, 2016
	December 31, 2018					December 31, 2017
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Noninterest-Bearing DDA	$	3,~~181~~724		78.65	%	$	3,~~474~~181		7.56	%
Interest-Bearing DDA		2018,~~498~~325		4941.28	%		20,~~630~~498		4449.62	%
Savings		3,~~649~~939		89.80	%		3,~~435~~649		78.48	%
Certificates of Deposit, $250,000 or more		~~667~~2,138		14.69	%		~~2,536~~667		51.56	%
Certificates of Deposit, less than $250,000		1315,~~641~~656		3235.8	%		1613,~~148~~641		3532.08	%
Total Deposits	$	4143,~~636~~782		100.0	%	$	4641,~~223~~636		100.0	%

28Certificates of deposit, specifically those less than $250,000, increased by $2.0 million in 2018.

~~Certificates of deposit, specifically those less than $250,000, decreased by $2.5 million, as a number of certificates matured in 2017.~~ The following table indicates the amount of certificates of deposit with balances of $100,000 or greater by time remaining until ~~maturity~~ maturity as of December 31, ~~2017~~2018.

Maturity Period at December 31, 2017	Amount
Maturity Period at December 31, 2018	Amount
	~~(In thousands)~~	(In thousands)
Three months or less	$	245
Over three months through six months		~~576~~314
Over six months through 12 months		~~703~~1,351
Over 12 months		14,~~709~~657
Total	$	36,~~233~~567

Stockholders’ Equity. Stockholders’ equity decreased by $1.41 million, or 54.2%, to $2625.32 million at December 31, ~~2017~~2018 from $2726.83 million at December 31, ~~2016~~2017 as the result of the repurchase of treasury stock. As described above, the Company had a net ~~loss~~income of $935,000 for the year ended December 31, ~~2017~~2018.

Liquidity Management

Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds available to meet short-term liquidity needs consist of deposits, funds from scheduled loan payments, loan prepayments, and income on earning assets. While maturities and scheduled amortization of loans are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition.

Our most liquid assets are cash and cash equivalents, interest-bearing deposits, and securities available for sale. At December 31, ~~2017~~2018, cash and cash equivalents totaled $24.97 million. Certificates of deposit in other financial institutions and securities available-for-sale totaled $53.72 million and $65.2 million, respectively, at December 31, ~~2017~~2018.

Our cash flows are composed of three primary classifications: cash flows from operating activities, investing activities, and financing activities. Net cash provided by operating activities was $261,000 for the year ended December 31, 2017 and net cash used in operating activities was $40,000 for the year ended December 31, 2016. Net cash used in investing activities, which consists primarily of activity in short term certificates of deposit and loans, was $3.4 million for the year ended December 31, 2017, and net cash used in investing activities was $7.4 million for the year ended December 31, 2016. Net cash used in financing activities, consisting of activity in deposit accounts and the purchase of treasury stock, was $6.1 million for the year ended December 31, 2017. Net cash used in financing activities was $5.4 million for the year ended December 31, 2016.28

~~Certificates~~Our cash flows are composed of ~~deposit~~three ~~maturing~~primary ~~over~~classifications: ~~the~~cash ~~next~~flows 12from ~~months~~operating ~~total~~activities, ~~$7.8~~investing ~~million~~activities, orand 54financing activities.~~8%,~~ ofNet ~~certificates~~cash ofprovided ~~deposit.~~by ~~Although~~operating weactivities ~~generally manage~~was $246,000 for the ~~pricing~~year ofended ~~our~~December ~~deposits~~31, to2018 beand ~~competitive~~$261,000 ~~management~~for ~~understands~~the ~~that~~year ended ifDecember ~~these~~31, ~~maturing~~2017. ~~deposits~~Net ~~are~~cash ~~not~~provided ~~reinvested or~~by doinvesting ~~not~~activities, ~~stay~~which ~~with~~consists ~~Central~~primarily ~~Federal~~of activity in short term certificates of deposit and loans, wewas ~~will~~$549,000 befor ~~required~~the toyear ~~seek~~ended ~~other~~December ~~sources~~31, of2018, ~~funding~~and ornet ~~rely~~cash onused ~~new~~in ~~certificates~~investing ofactivities ~~deposit~~was $3.4 million Iffor ~~these~~the ~~deposits~~year ~~are~~ended ~~withdrawn~~December 31, it2017. isNet ~~anticipated~~cash ~~that~~provided ~~they~~by ~~would~~financing beactivities, ~~funded~~consisting ~~with~~of ~~available~~activity ~~cash~~in ordeposit ~~replaced~~accounts ~~with~~and the ~~deposits~~purchase ~~from other~~of ~~customers.~~treasury ~~Federal~~stock, ~~Home~~was ~~Loan~~$1.0 ~~Bank~~million orfor ~~Federal~~the ~~Reserve~~year ~~Bank~~ended ~~borrowings~~December or31, ~~proceeds~~2018. ~~from~~Net ~~the~~cash ~~sale~~used ofin ~~securities~~financing ~~could~~activities ~~also~~was be$6.1 ~~used~~million tofor ~~replace~~the ~~unanticipated~~year ~~outflows~~ended ofDecember ~~deposits~~31, 2017.

Certificates of deposit maturing over the next 12 months total $7.7 million, or 43.3%, of certificates of deposit. Although we generally manage the pricing of our deposits to be competitive, management understands that if these maturing deposits are not reinvested or do not stay with Central Federal, we will be required to seek other sources of funding or rely on new certificates of deposit. If these deposits are withdrawn, it is anticipated that they would be funded with available cash or replaced with deposits from other customers. Federal Home Loan Bank or Federal Reserve Bank borrowings or proceeds from the sale of securities could also be used to replace unanticipated outflows of deposits.

Capital Management

We are subject to various regulatory capital requirements administered by the OCC, including risk-based capital measures. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At December 31, ~~2017~~2018, we exceeded all of our regulatory capital requirements, and were considered “well capitalized” under regulatory guidelines, with Tier 1 capital to adjusted average assets ratio of 3029.29%, a Tier 1 capital to risk-weighted assets ratio of 5146.1% a total-risk based capital to risk-weighted assets ratio of 5146.57% and a common equity Tier 1 capital to risk-weighted assets ratio of 5146.1%. Refer to Note 14 of the accompanying Notes to the Consolidated Financial Statements.

The capital from the offering of Central Federal Bancshares common stock in connection with the conversion of Central Federal to stock form significantly increased our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including the funding of lending activities. Our financial condition and results of operations will be enhanced by the capital from the offering, resulting in increased net interest-earning assets and net interest income. However, the large increase in equity resulting from the capital raised in the offering will, initially, have an adverse impact on our return on equity.

29Off-Balance Sheet Arrangements. In the normal course of business, Central Federal has outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying financial statements. Central Federal’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments is represented by the contractual or notional amount of those instruments. Central Federal has $7.9 million in unfunded commitments under lines of credit and there were no standby letters of credit as of December 31, 2018. Unfunded commitments under lines of credit were $3.8 million and there were no standby letters of credit as of December 31, 2017.

Off-Balance Sheet Arrangements. In the normal course of business, Central Federal has outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying financial statements. Central Federal’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments is represented by the contractual or notional amount of those instruments. Central Federal has $3.8 million in unfunded commitments under lines of credit and there were no standby letters of credit as of December 31, 2017. Unfunded commitments under lines of credit were $2.8 million and there were no standby letters of credit as of December 31, 2016.

Commitments to extend credit are agreements to lend a customer as long as there is no violation of any conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Central Federal evaluates each customer’s creditworthiness on a case by case basis. The amount of collateral obtained, if deemed necessary by Central Federal upon extension of credit, is based on management credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income producing commercial property.

Standby letters of credit are conditional commitments issued by Central Federal to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Central Federal’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit. Central Federal was not required to perform on any financial guarantees and did not incur any losses on its commitments.

Interest Rate Risk Management

As a result of our banking activities, we are exposed to interest rate risk. As a financial institution, the majority of our assets and liabilities are sensitive to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit our exposure to changes in market interest rates. We manage interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment.

A major source of interest rate risk is a difference in the repricing of assets as compared to the repricing of liabilities. Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturity of deposits. As a result, sharp increases in interest rates may adversely affect our earnings while decreases in interest rates may beneficially affect our earnings. We seek to reduce the potential volatility of our earnings by continually improving the matching between our asset and liability maturities and rates.

Central Federal’s goal is to manage asset and liability positions to moderate the effect of interest rate fluctuations on our earnings, while also controlling exposure to interest rate risk within policy limits approved by our board of directors. These limits and guidelines reflect Central Federal’s tolerance for interest rate risk over both short-term and long-term horizons.

Net Portfolio Value. We currently utilize economic value of equity analysis to review our level of interest rate risk. We measure our interest rate risk through the use of a financial model provided by an outside consulting firm. This model measures interest rate risk by capturing changes in the economic value of assets and liabilities, based on a range of assumed changes in market interest rates. Economic value represents the market value of our assets and liabilities. These analyses assess the risk of loss in market risk-sensitive instruments in the event of a sudden and sustained 100 to 400 basis point increase or 100 basis point decrease in market interest rates with no effect given to any steps that we might take to counter the effect of that interest rate movement.

30The following table presents the change in the economic value of our equity at December 31, 2018 that would occur in the event of an immediate change in interest rates based on assumptions we consider to be reasonable, with no effect given to any steps that we might take to counteract that change.

The following table presents the change in the economic value of our equity at December 31, 2017 that would occur in the event of an immediate change in interest rates based on assumptions we consider to be reasonable, with no effect given to any steps that we might take to counteract that change.

									EVE as a Percentage of
									Present Value of Assets (3)
			Estimated Increase									Increase
Change in Interest Rates	Estimated		(Decrease) in EVE						EVE			(Decrease)
(basis points) (1)	Amount (2)		Amount			Percent			Ratio (4)			(basis points)
(Dollars in thousands)
+400	$	20,473	$	(3,115	)		-13.21	%		32.97	%		(104	)
+300		21,367		(2,221	)		-9.42	%		33.41	%		(63	)
+200		22,251		(1,337	)		-5.67	%		33.79	%		(22	)
+100		22,036		(1,552	)		-2.34	%		34.04	%		3
-------		23,588		-			-			34.01	%		-
-100		23,842		254			1.07	%		33.65	%		(36	)

										EVE as a Percentage of
(1)	Assumes an immediate uniform change in interest rates at all maturities.
										Present Value of Assets (3)
(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
				Estimated Increase									Increase
(3)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
Change in Interest Rates		Estimated		(Decrease) in EVE						EVE			(Decrease)
(4)	EVE Ratio represents EVE divided by the present value of assets.
(basis points) (1)		Amount (2)		Amount			Percent			Ratio (4)			(basis points)
(Dollars in thousands)
+400		$	20,722		(694	)		-3.35	%		30.51	%		(102	)
+300			21,577		161			0.75	%		31.77	%		24
+200			21,950		534			2.43	%		32.32	%		79
+100			21,855		439			2.01	%		32.18	%		65
——-			21,416		-			-			31.53	%		-
-100			20,272		(1,144	)		-5.64	%		29.85	%		(168	)

(1)	Assumes an immediate uniform change in interest rates at all maturities.
(2)	EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
(3)	Present value of asets represents the discounted present value of incoming cash flows on interest-earning assets.
(4)	EVE Ratio represents EVE divided by the present value of assets.

We use various assumptions in assessing interest rate risk. These assumptions relate to interest rates, loan prepayment rates, deposit decay rates and the market values of certain assets under differing interest rate scenarios, among others. As with any method of measuring interest rate risk, certain shortcomings are inherent in the methods of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, 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. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, if there is a change in interest rates, expected rates of prepayments on loans and early withdrawals from certificates could deviate significantly from those assumed in calculating the table. Prepayment rates can have a significant impact on interest income. Because of the large percentage of loans we hold, rising or falling interest rates have a significant impact on the prepayment speeds of our earning assets that in turn affect the rate sensitivity position. When interest rates rise, prepayments tend to slow. When interest rates fall, prepayments tend to rise. Our asset sensitivity would be reduced if prepayments slow and vice versa. While we believe these assumptions to be reasonable, there can be no assurance that assumed prepayment rates will approximate actual future loan repayment activity.

Impact of Recent Accounting Pronouncements

See Note 1 of the accompanying Notes to the Consolidated Financial Statements.

Effect of Inflation and Changing Prices

The financial statements and related financial data presented in this prospectus have been prepared according to generally accepted accounting principles in the United States, which require the measurement of financial positions and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

This item is not applicable to smaller reporting companies such as the Company.

Item 8. Financial Statements and Supplementary Data

The audited consolidated financial statements for the Company are a part of this Annual Report on Form 10-K and may be infound ~~Part~~in Part IV under Item 15 ofbeginning ~~this~~on ~~Annual~~page ~~Report~~F-1.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~The discussion under item 4~~None.~~01 in the Form 8-K filed by the Company on August 21, 2017 is incorporated herein by reference.~~

Item 9A. Controls and Procedures

(a) Disclosure Controls and Procedures. The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (“Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting.

MANAGEMENT’S ANNUAL REPORT

ON INTERNAL CONTROL OVER

FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed under our supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. GAAP.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017~~2018, utilizing the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, ~~2017~~2018 is effective.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to permit preparation of financial statements in accordance U.S. GAAP; (2) receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements are prevented or timely detected.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ William A. Stoltz		/s/ Angela E. Medwick
William A. Stoltz		Angela E. Medwick
President and Chief Executive Officer		Chief Financial Officer

(c) Changes to Internal Control Over Financial Reporting. There was no change in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information called for by this item concerning the identification, business experience and qualifications of the Company’s directors will be included in our Proxy Statement (Schedule 14A) to be filed with SEC within 120 days of the Company’s fiscal year end in connection with its ~~2018~~2019 Annual Meeting of Shareholders currently scheduled to be held on May 1521, ~~2018~~2019 (the “Proxy Statement”), under the headings “Corporate Governance and Board Matters,” “Audit Related Matters,” and “Item 1 — Election Of Directors.” Information called for by this item concerning compliance with section 16(a) of the Exchange Act will be included in the Proxy Statement under the headings “Other Information Relating to Directors and Executive Officers” and “Beneficial Ownership Reporting Compliance,” and is incorporated ~~herein~~ herein by reference.

The Company has adopted a Code of Ethics (“Code”) that applies to the principal executive officer and principal financial officer and all other employees and directors. The Code addresses conflicts of interest, the treatment of confidential information, general employee conduct and compliance with applicable laws, rules and regulations. Persons interested in obtaining a copy of the Code of Ethics may do so by writing to the Company at: Central Federal Bancshares, Inc., 210 West 10th Street, Rolla, Missouri 65401, Attention: Secretary.

Item 11. Executive Compensation

The information required by this Item 11 is incorporated herein by reference to the section entitled “Executive Officer Compensation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item 12 is incorporated herein by reference to the section entitled “Beneficial Ownership” in the Proxy Statement.

Item 13. Certain Relationships, Related Transactions and Director Independence

The information required by this Item 13 related to certain relationships and related transactions is incorporated herein by reference to the section entitled “Other Information Relating to Directors and Executive Officers — Transactions with Related Parties” in the Proxy Statement. The information required under this Item 13 related to ~~Director~~director ~~Independence~~ independence is incorporated herein by reference to the section entitled “Corporate Governance and Board Matters” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this Item 14 is incorporated herein by reference to the section entitled “Item 2 — Ratification of the Independent Registered Public Accounting Firm” in the ~~Company’s~~ Proxy Statement.

PART IV

Item 15. Exhibits, Financial Statement Schedules

Documents Filed as Part of this Report

(a) Financial Statements. The following are filed as a part of this document under Item 8:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Condition as of December 31, ~~2017~~2018 and ~~2016~~2017

Consolidated Statements of ~~Operations~~Income (Loss) for the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2017~~2018 and ~~2016~~2017

Notes to Consolidated Financial Statements

(b) Exhibits.

	3.1		Articles of Incorporation of Central Federal Bancshares, Inc.(1)
	3.2		Bylaws of Central Federal Bancshares, Inc.(1)
	4.1		Specimen Common Stock Certificate of Central Federal Bancshares, Inc.(1)
	10.1		Employment Agreement, dated January 12, 2016, between Central Federal Bancshares, Inc., Central Federal Savings and Loan Association of Rolla and William A. Stoltz*(2)
	10.2		Change in Control Agreement, dated January 12, 2016, between Central Federal Savings and Loan Association of Rolla and Barbara Hamilton*(2)
	10.3		Central Federal Bancshares, Inc. 2017 Equity Incentive Plan*(3)
	14.1		Code of Ethics(3)
	14.1		Code of Ethics(4)
	21.1		Subsidiaries
	24.1		Power of Attorney (included on signature ~~pages~~page)
	31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) Certification)
	31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) Certification)
	32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350 Certification)
	101.1		The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition,; (ii) the Consolidated Statements of ~~Operations~~Income (Loss); (iii) the Consolidated Statements of Comprehensive Income (Loss); (iv) the Consolidated Statements of Stockholders’ Equity,; (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements

*	Management contract or compensatory agreement or arrangement.
(1)	Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-206874), as amended, initially filed with the Securities and Exchange Commission on September 11, 2015.
(2)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2015 (File No. 000-55553).
(3)	Incorporated by reference to Appendix A to the Company’s Proxy Statement for its 2017 Annual Meeting of Shareholders filed on April 7, 2017 (File No. 000-55553).
(4)	Persons interested in obtaining a copy of the Company’s Code of Ethics may do so by writing to the Company at: Central Federal Bancshares, Inc., 210 West 10th Street, Rolla, Missouri 65401, Attention: Secretary.

* Management contract or compensatory agreement or arrangement.

(1)	Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-206874), as amended, initially filed with the SEC on September 11, 2015.

(2)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2015 (File No. 000-55553).

(3)	Persons interested in obtaining a copy of the Company’s Code of Ethics may do so by writing to the Company at: Central Federal Bancshares, Inc., 210 West 10th Street, Rolla, Missouri 65401, Attention: Secretary.

(c) Financial Statement Schedules. All schedules for which this provision is made in the applicable accounting regulations of the SEC are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements and related notes thereto.

Item 16. Form 10-K Summary

Not applicable.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF CENTRAL FEDERAL BANCSHARES, INC.

	page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Financial Condition as of December 31, 2017 and 2016	F-4
Consolidated Statements of Financial Condition as of December 31, 2018 and 2017	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016	F-5
Consolidated Statements of Income (Loss) for the Years Ended December 31, 2018 and 2017	F-4
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2017 and 2016	F-6
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2018 and 2017	F-5
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2017 and 2016	F-7
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2018 and 2017	F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and 2016	F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017	F-7
Notes to Consolidated Financial Statements	F-98

F-1

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders ~~Central Federal Bancshares, Inc.~~

Central Federal Bancshares, Inc.

Rolla, Missouri

Opinion on the Financial Statements

We have audited the accompanying consolidated ~~statement~~statements of financial condition of Central Federal Bancshares, Inc. (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of ~~operations~~income, comprehensive income, stockholders’ ~~equity~~ equity and cash flows for the ~~year~~years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the ~~year~~years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit~~audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audit~~audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

BKD, LLP We have served as the Company’s auditor since 2017. Springfield, Missouri March 27, 2019

We have served as the Company’s auditor since 2017.

Springfield, Missouri

March 28, 2018

F-2

MICHAEL TROKEY & COMPANY, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

10411 CLAYTON ROAD

ST. LOUIS, MISSOURI 63131

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders Central Federal Bancshares, Inc.

Rolla, Missouri

We have audited the accompanying consolidated statement of financial condition of Central Federal Bancshares, Inc. (“Company”) as of December 3 I, 2016, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the year then ended. 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 audit.

We conducted our audit 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in die circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audit 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 Bancshares, Inc. as of December 3 I, 2016, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

St. Louis, Missouri March 23, 2017

F-3

CENTRAL FEDERAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(ROUNDED TO THOUSANDS, EXCEPT NUMBER OF SHARES)

	December 31, 2017			December 31, 2016
	December 31, 2018			December 31, 2017
ASSETS
Cash and Due from Financial Institutions	$	24,~~049~~168,000		$	122,~~099~~049,000
Federal Funds Sold		~~876~~561,000			~~100~~876,000
Cash and Cash Equivalents		24,~~925~~729,000			122,~~199~~925,000
Certificates of Deposit in Other Financial Institutions		53,~~699~~224,000			45,~~712~~699,000
Securities Available-for-Sale at Fair Value		65,~~220~~189,000			6,~~581~~220,000
Federal Home Loan Bank (FHLB) Stock, at Cost		8982,000			9789,000
Loans, Net of Allowance for Loan Losses of $273,000 and $263,000 at December 31, 2017 and December 31, 2016		51,937,000			49,248,000
Loans, Net of Allowance for Loan Losses of $282,000 and $273,000 at December 31, 2018 and December 31, 2017, respectively		54,493,000			51,937,000
Foreclosed Assets		-143,000			~~26,000~~-
Premises and Equipment, Net		~~710~~717,000			~~634~~710,000
Accrued Interest Receivable		~~163~~167,000			~~160~~163,000
Other Assets		~~346~~297,000			~~346~~245,000
Total Assets	$	6869,~~089~~041,000		$	7467,~~003~~988,000
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Noninterest-Bearing	$	3,~~181~~724,000		$	3,~~474~~181,000
Interest-Bearing		3840,~~455~~058,000			4238,~~749~~455,000
Total Deposits		4143,~~636~~782,000			4641,~~223~~636,000
Other Liabilities		~~135~~38,000			2734,000
Total Liabilities		4143,~~771~~820,000			4641,~~250~~670,000
Reedeemable Common Stock Held By Employee Stock Ownership Plan (“ESOP”)		159,000			73,000
Reedeemable Common Stock Held By Employee Stock
Ownership Plan (“ESOP”)		242,000			159,000
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding		-			-
Preferred Stock, $0.01 par value; 1,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.01 par value; 10,000,000 shares authorized; 1,788,020 shares issued; outstanding shares 2017 - 1,675,920, 2016 - 1,788,020		18,000			18,000
Common stock, $0.01 par value; 10,000,000 shares authorized; 1,788,020 shares issued; outstanding shares: 2018 - 1,592,920, 2017 - 1,675,920		18,000			18,000
Retained Earnings - Substantially Restricted		12,~~758~~811,000			12,~~767~~758,000
Additional Paid-In Capital		16,~~464~~486,000			16,~~446~~464,000
Treasury Stock, at cost; 2017- 112,100 shares		(1,523,000	)		-
Treasury Stock, at cost: 2018 - 195,100 shares; 2017 - 112,100 shares		(2,660,000	)		(1,523,000	)
Common Stock Acquired by Employee Stock Ownership Plan (“ESOP”)		(1,316,000	)		(1,373,000	)
Common Stock Acquired by the ESOP		(1,259,000	)		(1,316,000	)
Accumulated Other Comprehensive Income (Loss)		(83175,000	)		(~~105~~83,000	)
Total Stockholders’ Equity		2625,~~318~~221,000			2726,~~753~~318,000
Less Maximum cash obligation related to ESOP shares		~~159~~242,000			73159,000
Total Stockholders’ Equity Less Maximum Cash Obligations Related to ESOP Shares		26,159,000			27,680,000
Total Stockholders’ Equity Less Maximum Cash Obligations
Total Liabilities and Stockholders’ Equity	$	68,089,000		$	74,003,000
Related to ESOP Shares		24,979,000			26,159,000
Total Liabilities and Stockholders’ Equity	$	69,041,000		$	67,988,000

See Accompanying Notes to Consolidated Financial Statements.

F-43

CENTRAL FEDERAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME (LOSS)

(ROUNDED TO THOUSANDS, EXCEPT ~~PER~~NUMBER ~~SHARE~~OF ~~DATA~~SHARES)

	Year Ended
	December 31,
	2017			2016
	2018			2017
INTEREST INCOME
Loans, Including Fees	$	2,~~217~~395,000		$	2,~~240~~217,000
Securities and Other		~~268~~249,000			~~233~~268,000
Total Interest Income		2,~~485~~644,000			2,~~473~~485,000
INTEREST EXPENSE
Deposits		~~287~~327,000			~~359~~287,000
Total Interest Expense		~~287~~327,000			~~359~~287,000
NET INTEREST INCOME		2,~~198~~317,000			2,~~114~~198,000
PROVISION FOR LOAN LOSSES		925,000			-9,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		2,~~189~~292,000			2,~~114~~189,000
NONINTEREST INCOME
Customer Service Fees		8992,000			9289,000
Other Income		25,000			18,000
Unrealized Loss on Equity Securities		(22,000	)		-
Total Noninterest Income		114,000			110,000
Other Income		20,000			25,000
Total Noninterest Income		90,000			114,000
NONINTEREST EXPENSE
Compensation and Employee Benefits		1,~~278~~319,000			1,~~115~~278,000
Data Processing and Other Outside Services		~~341~~333,000			~~339~~341,000
FDIC Insurance and Regulatory Assessment		5552,000			7255,000
Occupancy and Equipment		~~188~~206,000			~~178~~188,000
Legal and Professional Services		~~315~~242,000			~~474~~315,000
Supplies, Telephone, and Postage		4837,000			48,000
Expense (Income) from Foreclosed Assets		(16,000	)		41,000
Expense (Income) from Foreclosed Assets, net		29,000			(16,000	)
Contribution to Charitable Foundation		-			788,000
Other		104,000			108,000
Other		108,000			101,000
Total Noninterest Expense		2,322,000			2,317,000
Total Noninterest Expense		2,317,000			3,156,000
INCOME (LOSS) BEFORE INCOME TAXES		60,000			(14,000	)
INCOME (LOSS) BEFORE INCOME TAXES		(14,000	)		(932,000	)
INCOME TAX EXPENSE (BENEFIT)		25,000			(5,000	)
INCOME TAX EXPENSE (BENEFIT)		(5,000	)		(59,000	)
NET INCOME (LOSS)	$	35,000		$	(9,000	)
NET INCOME (LOSS)	$	(9,000	)	$	(873,000	)
Common share data
Basic and diluted loss per share	$	(0.01	)	$	(0.55	)
Basic and diluted income (loss) per share	$	0.02		$	(0.01	)

See Accompanying Notes to Consolidated Financial Statements.

F-54

CENTRAL FEDERAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(ROUNDED TO THOUSANDS)

	Year Ended
	December 31,
	2017			2016
	2018			2017
NET LOSS	$	(9,000	)	$	(873,000	)
NET INCOME (LOSS)	$	35,000		$	(9,000	)
Other Comprehensive Income (Loss):
Unrealized Gains (Losses) on Securities Available-for-Sale		39,000			(163,000	)
Unrealized Gains (Losses) on Debt Securities Available-for-Sale		(122,000	)		39,000
Income Tax Benefit (Expense)		~~(17~~30,000	)		48(17,000	)
Total Other Comprehensive Income (Loss), net of tax		22(92,000	)		~~(115~~22,000	)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	13(57,000	)	$	~~(988~~13,000	)

See Accompanying Notes to Consolidated Financial Statements.

F-65

CENTRAL FEDERAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ~~FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016~~

(ROUNDED TO THOUSANDS)

	Common Stock		Additional Paid-In Capital		Common Stock Acquired by ~~Employee Stock Ownership Plan (“~~ESOP”)			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Total
BALANCE, JANUARY 1, 2016	$	-	$	-	$	-			13,640,000		$	-		$	10,000		$	13,650,000
Net Loss		-		-		-			(873,000	)		-			-			(873,000	)
Other Comprehensive Loss		-		-		-			-			-			(115,000	)		(115,000	)
Issuance of 1,788,020 shares of common stock at $10.00 per share, net of offering costs		18,000		16,437,000		-			-			-			-			16,455,000
Funding of ESOP with 143,042 shares of common stock		-		-		(1,430,000	)		-			-			-			(1,430,000	)
ESOP shares Earned		-		9,000		57,000			-			-			-			66,000
BALANCE, DECEMBER 31, 2016	$	18,000	$	16,446,000	$	(1,373,000	)	$	12,767,000		$	-		$	(105,000	)	$	27,753,000
BALANCE, JANUARY 1, 2017	$	18,000	$	16,446,000	$	(1,373,000	)	$	12,767,000		$	-		$	(105,000	)	$	27,753,000
Net Loss		-		-		-			(9,000	)		-			-			(9,000	)
Other Comprehensive Income		-		-		-			-			-			22,000			22,000
ESOP Shares Earned		-		18,000		57,000			-			-			-			75,000
Treasury Stock Purchased, 112,100 shares		-		-		-			-			(1,523,000	)		-			(1,523,000	)
BALANCE, DECEMBER 31, 2017	$	18,000	$	16,464,000	$	(1,316,000	)	$	12,758,000		$	(1,523,000	)	$	(83,000	)	$	26,318,000
BALANCE, JANUARY 1, 2018	$	18,000	$	16,464,000	$	(1,316,000	)	$	12,758,000		$	(1,523,000	)	$	(83,000	)	$	26,318,000
Net Income		-		-		-			35,000			-			-			35,000
Other Comprehensive Income		-		-		-			-			-			(74,000	)		(74,000	)
Adjustment for equity securities upon adoption of ASU 2016-01		-		-		-			18,000			-			(18,000	)		-
ESOP Shares Earned		-		22,000		57,000			-			-			-			79,000
Treasury Stock Purchased, 83,000 shares		-		-		-			-			(1,137,000	)		-			(1,137,000	)
BALANCE, DECEMBER 31, 2018	$	18,000	$	16,486,000	$	(1,259,000	)	$	12,811,000		$	(2,660,000	)	$	(175,000	)	$	25,221,000

See Accompanying Notes to Consolidated Financial Statements.

F-76

CENTRAL FEDERAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(ROUNDED TO THOUSANDS)

	Year Ended
	December 31,
	2017			2016
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(9,000	)	$	(873,000	)
Net Income (Loss)	$	35,000		$	(9,000	)
Items not requiring (providing) cash:
Net Amortization of Securities		5237,000			4752,000
Provision for Loan Losses		925,000			-9,000
Depreciation		6878,000			6968,000
Deferred Income Tax		(2,000	)		~~(67~~2,000	)
Loss (Gain) on Sale of Foreclosed Assets		(22,000	)		14,000
Gain (Loss) on Impairment/ Sale of Foreclosed Assets		8,000			(22,000	)
ESOP Expense		7579,000			6675,000
Loss on Equity Securities		22,000			-
Net Changes in:
Accrued Interest Receivable		(34,000	)		(453,000	)
Other Assets		(1925,000	)		150,~~350,~~000
Other Liabilities		~~108~~(7,000	)		~~(601~~39,000	)
Net Cash Provided by (Used In) Operating Activities		261,000			(40,000	)
Net Cash Provided by Operating Activities		246,000			261,000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Certificates of Deposit in Other Financial Institutions		(2248,~~971,~~000	)		(2,~~480~~971,000	)
Proceeds from Mautrities of Certificates of Deposit in Other Financial Institutions		1,984,000			248,000
Proceeds from Maturities of Certificates of Deposit in Other Financial Institutions		2,723,000			1,984,000
Net Change in FHLB Stock		87,000			~~(20~~8,000	)
Purchase of Securities Available-for-Sale		~~(777,000~~-	)		(7777,~~256,~~000	)
Proceeds from Maturities, Calls and Paydowns of Securities Available-for-Sale		1873,~~125,~~000			~~901~~1,125,000
Net Decrease (Increase) in Loans		(2,780,000	)		871,000
Net Increase in Loans		(2,716,000	)		(2,780,000	)
Purchases of Premises and Equipment		(~~144~~74,000	)		(27144,000	)
Proceeds from Sale of Foreclosed Assets		~~130,000~~-			~~359~~130,000
Net Cash Used In Investing Activities		(3,425,000	)		(7,404,000	)
Capitalized Costs on Foreclosed Assets		(16,000	)		-
Net Cash Provided by (Used In) Investing Activities		549,000			(3,425,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase (Decrease) in Deposits		(42,~~587~~146,000	)		(204,~~392~~587,000	)
Purchase of Treasury Stock		(1,~~523~~137,000	)		-(1,523,000	)
Proceeds from Issuance of Common Stock		-			15,025,000
Net Cash Provided by (Used in) Financing Activities		1,009,000			(6,110,000	)
Net Cash Used in Financing Activities		(6,110,000	)		(5,367,000	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		1,804,000			(9,274,000	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(9,274,000	)		(12,811,000	)
Cash and Cash Equivalents at Beginning of Year		2,925,000			12,199,000
Cash and Cash Equivalents at Beginning of Year		12,199,000			25,010,000
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	4,729,000		$	2,925,000
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	2,925,000		$	12,199,000
SUPPLEMENTAL CASH FLOW DISCLOSURE
Interest Paid on Deposits	$	~~287~~327,000		$	~~359~~287,000
Income Taxes Paid, Net of Refunds Received	$	~~(55~~12,000	)	$	(3955,000	)
Noncash Investing Activities:
Transfer of Loans to Foreclosed Assets	$	82135,000		$	-82,000
Transfer of Foreclosed Assets to Loans	$	-		$	209,000
Premises and Equipment in Payables	$	11,000		$	-

See Accompanying Notes to Consolidated Financial Statements.

F-87

~~central~~CENTRAL ~~federal~~FEDERAL ~~bancshares~~BANCSHARES, ~~inc~~INC.

~~notes~~NOTES toTO ~~CoNsolidated~~CONSOLIDATED ~~financial~~FINANCIAL ~~statements~~STATEMENTS

DECEMBER 31, 2017 AND 2016

(ROUNDED TO THOUSANDS)

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Central Federal Bancshares, Inc. (“Central Federal Bancshares” or the “Company”) is a holding company that owns 100% of Central Federal Savings and Loan Association of Rolla (“Central Federal”). Central Federal is a community-oriented financial institution, dedicated to serving the financial service needs of customers within its market area, which generally consists of Phelps County, Missouri, although it also services customers in the contiguous Missouri counties of Dent, Texas, Crawford, Pulaski and Maries. Central Federal offers a variety of loan and deposit products to meet the borrowing needs of its customers. Central Federal operates out of its office in Rolla, Missouri. Central Federal is subject to regulation, examination, and supervision by the Office of the Comptroller of the Currency, or OCC, its primary federal regulator, and the Federal Deposit Insurance Corporation, or FDIC, its deposit insurer.

Stock Conversion

On August 4, 2015, the Board of Directors of Central Federal adopted a Plan of Conversion, as subsequently amended, providing for Central Federal to convert from a federally chartered mutual savings association into a federally chartered stock savings association and operate as a wholly-owned subsidiary of a newly chartered savings and loan holding company. On January 12, 2016, Central Federal completed the conversion and now operates as a wholly-owned subsidiary of the Company. In connection with the conversion, the Company sold 1,719,250 shares of common stock in a subscription offering at $10.00 per share, including the sale of 143,042 shares to the employee stock ownership plan (“ESOP”) formed by Central Federal in connection with the conversion. In addition, the Company contributed an additional 68,770 shares of common stock and $100,000 in cash to the Central Federal Community Foundation, a charitable organization created by the Company and Central Federal in connection with the conversion and the related stock offering. The cost of the conversion and issuance of common stock was deferred and deducted from the proceeds of the offering. Central Federal incurred conversion costs of $1,425,000.

In accordance with applicable federal conversion regulations, at the time of the completion of the conversion, Central Federal established a liquidation account in an amount equal to Central Federal’s total retained earnings as of the latest balance sheet date in the final prospectus used in the conversion (which was June 30, 2015). Each eligible account holder or supplemental account holder is entitled to a proportionate share of this liquidation account only in the event of a complete liquidation of Central Federal. This share will be reduced if the eligible account holder’s or supplemental account holder’s deposit balance falls below the amounts on the date of record as of any December 31 and will cease to exist if the account is closed. The liquidation account will never be increased despite any increase after conversion in the related deposit balance. Central Federal may not pay dividends if those dividends would reduce equity capital below the required liquidation account amount.

Principles of Consolidation

On January 12, 2016, Central Federal completed its conversion from the mutual to stock form of ownership and now operates as a wholly-owned subsidiary of the Company. The conversion was accounted for as a change in corporate form with the historic base of Central Federal’s assets, liabilities and equity unchanged as a result. The consolidated financial statements as of and for the year ended December 31, ~~2017~~2018 and ~~2016~~2017 are for the Company and Central Federal. Intercompany transactions and balances have been eliminated in the consolidation.

F-98

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for loan losses, valuation of foreclosed assets, valuation of deferred tax assets, and fair values of financial instruments.

Concentrations of Credit Risk

Most of the Company’s activities are with customers located within Phelps County, Missouri and surrounding areas. Note 4 discusses the types of securities that the Company invests in. Note 5 discusses the types of lending that the Company engages in.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents include cash and balances due from financial institutions and federal funds sold, all of which have an original maturity within 90 days. Cash flows from loans and deposits are reported net.

The Company maintains cash in correspondent bank accounts in amounts which exceed the federally insured limits. The Company’s management monitors the balances in these accounts and periodically assesses the financial condition of the correspondent banks. Interest bearing funds in cash and cash equivalents were $24,~~527~~729,000 and $102,~~934~~925,000 as of December 31, ~~2017~~2018 and ~~2016~~2017, respectively. At December 31, ~~2017~~2018, the balance of Company’s cash accounts exceeded federally insured limits by approximately $~~968~~3,390,000.

Certificates of Deposit in Other Financial Institutions

Certificates of deposit in other financial institutions are carried at cost and generally mature in five years or less.

Securities

Securities are classified as available-for-sale and are carried at fair value with unrealized gains and losses reported in other comprehensive income (loss). Realized gains and losses on securities available-for-sale are included in noninterest income and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains and losses on sales of securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the period to maturity.

F-109

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Securities (Continued)

Declines in the fair value of individual available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other than temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the Company’s intent and ability to hold the investment for a period of time sufficient to recover the temporary loss. The ability to hold is determined whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other than temporary is recorded as a loss in noninterest income.

FHLB Stock, at Cost

The Company is a member of the Federal Home Loan Bank of Des Moines (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 and periodically evaluated for impairment. Because this stock is viewed as a long term investment, impairment is based on ultimate recovery at par value. Both cash and stock dividends are reported as income. Management believes no impairment charge was necessary related to the FHLB stock for the years ended December 31, ~~2017~~2018 or ~~2016~~2017.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans, and premiums or discounts on purchased loans.

Interest income is accrued on the unpaid principal balance. The Company has determined the application of guidance in the nonrefundable fees and other costs standard regarding the deferral of loan origination fees and direct loan origination costs, does not have a material effect on its financial statements. As such, these fees and costs have been primarily recognized during the period they are collected and incurred, respectively. The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Consumer ~~loans~~ and other ~~personal~~ personal loans are typically charged off no later than 180 days past due. Past due status is based on 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~~ considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income and amortization of related deferred loan fees or costs is suspended. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. The cash-basis is used when a determination has been made that the principal and interest of the loan is collectible. If collectability of the principal and interest is in doubt, payments are applied to loan principal. The determination of ultimate collectability is supported by a current, well documented credit evaluation of the borrower’s financial condition and prospects for repayment, including consideration of the borrower’s sustained historical repayment performance and other relevant factors. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, the borrower has demonstrated a period of sustained performance, and future payments are reasonably assured. A sustained period of repayment performance generally would be a minimum of six months.

F-1110

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses

The allowance for loan losses (allowance) is an estimate of probable loan losses inherent in the Company’s loan portfolio. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after loan losses and loan growth. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged-off amounts is recorded as a recovery to the allowance.

The allowance consists of three primary components, general allowances, specific allowances related to impaired loans, and unallocated allowances. The general component covers non-impaired loans and is based on historical losses adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent three years. This actual loss experience is adjusted for qualitative factors based on the risks present for each portfolio segment. These qualitative factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans for which impairment is measured generally include loans classified as substandard, doubtful, non-accrual, or are considered a troubled debt restructured loan. When a loan is impaired, the Company measures impairment based on the present value of expected future cash flows discounted at the original contractual interest rate, except that as a practical expedient, it may measure impairment based on an observable market price, or the fair value of the collateral if collateral dependent. A loan is collateral dependent if the repayment is expected to be provided solely by the underlying collateral.

Allowance allocations other than general and specific are included in the unallocated portion. The unallocated allowance reflect the imprecision inherent in the underlying assumptions used in the methodologies for estimating the general allowance.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (TDR) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDRs are considered impaired and measured for impairment as described above in the calendar year of the restructuring. In subsequent years, a restructured loan may cease being classified as impaired if the loan was modified at a market rate and is performing according to the modified terms. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. Restructured loans can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing on accrual status, depending on the individual facts and circumstances of the borrower. Nonaccrual restructured loans are included and treated with other nonaccrual loans.

F-1211

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses (Continued)

The Company assigns a risk rating to all loans to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by the Company’s regulators. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into five major categories, defined as follows:

Unclassified: An unclassified loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, this potential weakness may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard: Loans classified as substandard are not adequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as Substandard have a well-defined weakness or weaknesses that jeopardize the repayment of the debt. Well-defined weaknesses include a borrower’s lack of marketability, inadequate cash flow or collateral support, failure to complete construction on time, or the failure to fulfill economic expectations. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

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

Loss: Loans classified as loss are considered uncollectible and charged off immediately.

The Company maintains a separate general allowance for each portfolio segment. These portfolio segments include commercial business, commercial and multi-family real estate, residential real estate, and consumer and other with risk characteristics described as follows:

Commercial Business: Commercial business loans generally possess a higher inherent risk of loss than real estate portfolio segments because these loans are generally underwritten to existing cash flows of operating businesses. Debt coverage is provided by business cash flows and economic trends influenced by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Commercial and Multi-Family Real Estate: Commercial and multi-family real estate loans generally possess a higher inherent risk of loss than other real estate portfolio segments. Adverse economic developments or an overbuilt market impact commercial real estate projects and may result in troubled loans. Trends in vacancy rates of commercial properties impact the credit quality of these loans. High vacancy rates reduce operating revenues and the ability for the properties to produce sufficient cash flow to service debt obligations.

F-1312

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Allowance for Loan Losses (Continued)

Residential Real Estate: The degree of risk in residential mortgage lending depends primarily on the loan amount in relation to collateral value, the interest rate and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of probable loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Consumer and Other: The consumer and other loan portfolio are usually comprised of a large number of small loans scheduled to be amortized over a specific period. Most loans are made directly for consumer purchases. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans.

Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the board of directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions, and other factors. If the board of directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. Central Federal is subject to periodic examination by its primary regulator, which may require additions to the allowance based on judgments regarding loan portfolio information available at the time of its examinations.

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, and standby letters of credit. Such financial instruments are recorded when they are funded.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets held for sale are carried at the lower of the new cost basis or fair value, less costs to sell. This evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements.

Impairment losses on assets to be held and used are measured at the amount by which the carrying amount of a property exceeds its fair value. Costs of significant asset improvements are capitalized, whereas costs relating to holding assets are expensed. Revenues and expenses from operations and changes in the valuation allowance are included in operations of foreclosed assets.

Premises and Equipment

Land is carried at cost. Other premises and equipment are carried at costs net of accumulated depreciation. Depreciation is computed on the straight-line method based principally on the estimated useful lives of the assets. Useful lives range from 15 to 40 years for building and improvements; 2 to 15 years for furniture, fixtures and equipment; and 5 years for automobiles. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on dispositions are included in current operations.

F-1413

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell.

Advertising Costs

Advertising costs are expensed as incurred.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax liabilities.

Under U.S. generally accepted accounting principles, a valuation allowance is required to be recognized if it is “more likely than not” that the deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, the forecasts of future income, applicable tax planning strategies, and assessments of the current and future economic and business conditions.

The Company files federal and state income tax returns, and it is not subject to federal or state income tax examinations for taxable years prior to ~~2014~~2015.

Comprehensive Income

Recognized revenue, expenses, gains, and losses are included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities available-for-sale, are reported as a separate component of the stockholders’ equity section of the statements of financial condition, such items, along with net income (loss), are components of comprehensive income (loss).

F-1514

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New Accounting Standards

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” an amendment to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. ~~This amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.~~ Entities should apply the amendment by ~~means~~ means of a cumulative-effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment ~~related~~ related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments ~~that~~ that exist as of the date of adoption. The standard was effective January 1, 2018 and the Company adopted the ~~accounting~~new standard during the first quarter of 2018, as required. The adoption of the standard ~~did~~resulted ~~not~~in ~~have~~ a ~~material~~cumulative-effect ~~impact~~adjustment onthat ~~the~~increased ~~Company’s~~retained earnings ~~consolidated~~by ~~statements~~$18,000 ofwith ~~financial~~an ~~condition or~~offsetting ~~our~~adjustment ~~consolidated~~to ~~statements of operations~~AOCI.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019. The Company has formed a cross functional committee to oversee the system, data, reporting and other considerations for the purposes of meeting the requirements of this standard. The Company has not yet determined the impact the adoption of ASU 2016-13 will have on the consolidated financial statements.

In ~~March~~August ~~2017~~2018, the FASB issued ASU ~~2017~~2018-0813, ~~Receivables-Nonrefundable~~Fair ~~Fees~~Value ~~and~~Measurement, ~~Other~~Changes ~~Costs~~to ~~(Subtopic~~the ~~310-20):~~Disclosure ~~Premium~~Requirements, ~~Amortization~~removing disclosure ofrequirements ~~Purchased~~for ~~Callable~~transfers ~~Debt~~between ~~Securities.~~levels ~~The~~1 ~~amendments~~and in2 ~~this~~and ~~ASU shorten~~ the ~~amortization~~valuation ~~period~~process for ~~certain~~level ~~callable~~3, ~~debt securities~~while ~~held~~adding atdisclosure arequirements for ~~premium.~~changes ~~The~~in ~~amendments~~unrealized ~~require~~gains ~~the~~or ~~premium~~losses toin beother ~~amortized~~comprehensive toincome ~~the earliest call date. The amendments do not require an accounting change~~ for ~~securities~~level ~~held~~3 atfair avalue ~~discount; the discount continues to be amortized to maturity~~measurements. The amendments in this ASU will be effective for interim and annual reporting periods beginning after December 15, ~~2018~~2019. The Company ~~elected~~has not ~~early~~yet ~~adoption of~~determined ~~ASU~~the ~~2017-08~~impact ~~during~~the ~~2017,~~adoption ~~and~~of itASU ~~did~~2018-13 ~~not~~will have ~~a significant effect~~ on the consolidated financial statements.

FIn February 2016, the FASB issued ASU 2016-1602, Leases (Topic 842) that requires companies to recognize operating lease right of use assets and related liabilities on the balance sheet. ASU 2016-02 is effective for the Company beginning January 1, 2019. The Company has determined that the adoption of ASU 2016-02 will have no impact on the consolidated financial statements.

F-15

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition Accounting Changes

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), an amendment that clarifies the principles for recognizing revenue and establishes principles for reporting information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. Most of our revenue-generating transactions are not subject to Topic 606, including revenue generated from financial instruments, such as our loans, investments and letters of credit. Service charges on deposit accounts, representing general services fees for monthly account maintenance, and transaction-based fee revenue is recognized when our performance is completed which is generally monthly.

ASU 2014-09 became effective for the Company on January 1, 2018 and had no material effect on how we recognize revenue or on the consolidated financial statements and disclosures.

Treasury Stock

Common stock shares repurchased are recorded at cost. Cost of shares retired or reissued is determined using the first in, first out method.

Reclassification

Certain amounts in the ~~2016~~2017 financial statements have been reclassified to conform to the ~~2017~~2018 presentation. These reclassifications had no effect on net ~~loss~~income.

Subsequent Events

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were available to be issued.

note 2 INCOME (LOSS) PER SHARE

~~Loss~~Income (loss) per share is based upon the weighted-average shares outstanding. The shares ~~were issued on January 12, 2016. The shares~~ in ~~the Company~~Central Federal’s ~~Employee~~ESOP ~~Stock Ownership Plan~~ which have been committed to be released are considered outstanding.

	December 31, 2017			December 31, 2016
	December 31, 2018			December 31, 2017
Basic and Diluted Loss per Share:
Basic and Diluted Income (Loss) per Share:
Net Loss	$	(9,000	)	$	(873,000	)
Net Income (Loss)	$	35,000		$	(9,000	)
Weighted-Average Basic and Diluted Shares Outstanding		1,~~610~~516,~~060~~301			1,~~593~~610,~~757~~060
Net Loss per Share, Basic and Diluted	$	(0.01	)	$	(0.55	)
Net Income (Loss) per Share, Basic and Diluted	$	0.02		$	(0.01	)

F-16

note 3 Certificates of DEPOSIT IN OTHER FINANCIAL INSTITUTIONS

Certificates of deposit in other financial institutions are as follows:

	December 31,
	2017		2016
	2018		2017
Certificates of Deposit at Cost Maturing In:
One Year or Less	$	2992,~~481,~~000	$	12,~~488~~481,000
One Year to Five Years		32,~~218~~232,000		3,~~224~~218,000
	$	53,~~699~~224,000	$	45,~~712~~699,000

F-17

note 4 sECURITIES

The carrying amount and estimated fair market value of debt securities classified as available-for-sale are summarized as follows:

	December 31, 2017
	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage Backed Securities	$	4,~~994~~163,000	$	-	$	(~~111~~188,000	)	$	43,~~883~~975,000
Small Business Administration Pools		~~916~~840,000		-		(3145,000	)		~~885~~795,000
Municipal Obligation		~~406~~405,000		~~6,000~~-		-(3,000	)		~~412~~402,000
Federal Home Loan Mortgage Corp. Stock		15,000		25,000		-			40,000
Total	$	5,408,000	$	-	$	(236,000	)	$	5,172,000
Total	$	6,331,000	$	31,000	$	(142,000	)	$	6,220,000

	December 31, 2016
	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage Backed Securities	$	54,~~321~~994,000	$	-	$	(~~139~~111,000	)	$	54,~~182~~883,000
Small Business Administration Pools		~~988~~916,000		-		(3431,000	)		~~954~~885,000
Municipal Obligation		~~407~~406,000		-6,000		~~(4,000~~-	)		~~403~~412,000
Federal Home Loan Mortgage Corp. Stock		15,000		27,000		-			42,000
Total	$	6,316,000	$	6,000	$	(142,000	)	$	6,180,000
Total	$	6,731,000	$	27,000	$	(177,000	)	$	6,581,000

At December 31, ~~2017~~2018, the S&P credit rating of the municipal obligation was an AA+.

There ~~were~~was noa ~~securities~~portion of one security pledged as collateral in the amount of $130,000 at December 31, ~~2017~~2018, and ~~2016~~there were no securities pledged as collateral at December 31, 2017.

During the years ended December 31, ~~2017~~2018 and ~~2016~~2017, the Company did not sell any securities.

The following table indicates amortized cost and estimated fair value of securities available -for-sale at December 31, ~~2017 based~~2018 based upon contractual maturity.

	Amortized Cost		Fair Value
Over Ten Years	$	~~406~~405,000	$	~~412~~402,000
Mortgage Backed Securities and SBA Pools with no stated maturity date		5,~~910~~003,000		54,~~768~~770,000
Equity Securities		15,000		4017,000
Total	$	65,~~331~~423,000	$	65,~~220~~189,000

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2017 and 2016 was $5,768,000 and $6,539,000, which is approximately 93% and 99%, respectively, of the Company’s available forF-~~sale investment portfolio. These declines primarily resulted from changes in market interest rates.~~17

note 4 sECURITIES (CONTINUED)

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2018 and 2017 was $5,172,000 and $5,768,000, which is approximately 99% and 93%, respectively, of the Company’s available-for-sale investment portfolio. These declines primarily resulted from changes in market interest rates.

The following tables show securities with gross unrealized losses at December 31, 2018 and 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position.

	December 31, 2018
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss			Fair Value		Gross Unrealized Loss

Mortgage Backed Securities	$	-	$	-		$	3,975,000	$	(188,000	)	$	3,975,000	$	(188,000	)
Small Business Administration Pools		-		-			795,000		(45,000	)		795,000		(45,000	)
Muncipal Obligation		402,000		(3,000	)		-		-			402,000		(3,000	)
Total	$	402,000	$	(3,000	)	$	4,770,000	$	(233,000	)	$	5,172,000	$	(236,000	)

	December 31, 2017
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses

Mortgage Backed Securities	$	665,000	$	(8,000	)	$	4,218,000	$	(103,000	)	$	4,883,000	$	(111,000	)
Small Business Administration Pools		-		-			885,000		(31,000	)		885,000		(31,000	)
Muncipal Obligation		-		-			-		-			-		-
Total	$	665,000	$	(8,000	)	$	5,103,000	$	(134,000	)	$	5,768,000	$	(142,000	)

There were no securities with unrealized losses which management believes were other-than-temporarily impaired at December 31, 2018 and 2017.

The carrying amount and estimated fair value of equity securities are shown below:

	December 31, 2018
	Amortized Cost		Gross Recognized Gains		Gross Recognized Losses		Fair Value

Federal Home Loan Mortgage Corp. Stock	$	15,000	$	2,000	$	-	$	17,000
Total	$	15,000	$	2,000	$	-	$	17,000

		December 31, 2017
		Amortized Cost		Gross Recognized Gains		Gross Recognized Losses		Fair Value

Federal Home Loan Mortgage Corp. Stock	$	15,000	$	25,000	$	-	$	40,000
Total	$	15,000	$	25,000	$	-	$	40,000

F-18

note 4 sECURITIES (CONTINUED)

~~The~~Prior ~~following~~to ~~tables~~January ~~show~~1, 2018, equity securities ~~with~~were ~~gross~~stated at fair value with unrealized gains and losses atreported ~~December~~in 31AOCI, ~~2017~~net ~~and~~of ~~2016~~tax. On January 1, ~~aggregated~~2018, bythe ~~investment~~unrealized ~~category~~ gain was reclassified out of AOCI and ~~length~~into retained earnings with subsequent changes in fair value being recognized in net income. Net losses recognized December 31, 2018 amounted to $22,000, all of ~~time~~which ~~that~~was ~~individual~~unrealized as securities ~~have~~were ~~been~~still inheld aat ~~continuous~~December ~~loss~~31, ~~position~~2018.

	December 31, 2017
	Less Than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair Value		Loss			Fair Value		Loss			Fair Value		Loss
Mortgage Backed Securities	$	665,000	$	(8,000	)	$	4,218,000	$	(103,000	)	$	4,883,000	$	(111,000	)
Small Business Administration Pools		-		-			885,000		(31,000	)		885,000		(31,000	)
Muncipal Obligation		-		-			-		-			-		-
Total	$	665,000	$	(8,000	)	$	5,103,000	$	(134,000	)	$	5,768,000	$	(142,000	)

	December 31, 2016
	Less Than 12 Months				12 Months or More					Total
			Gross				Gross					Gross
			Unrealized				Unrealized					Unrealized
	Fair Value		Loss		Fair Value		Loss			Fair Value		Loss
Mortgage Backed Securities	$	-	$	-	$	5,182,000	$	(139,000	)	$	5,182,000	$	(139,000	)
Small Business Administration Pools		-		-		954,000		(34,000	)		954,000		(34,000	)
Muncipal Obligation		-		-		403,000		(4,000	)		403,000		(4,000	)
Total		-		-	$	6,539,000	$	(177,000	)	$	6,539,000	$	(177,000	)

There were no securities with unrealized losses which management believes were other-than-temporarily impaired at December 31, 2017 and 2016.

note 5 LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are summarized as follows:

	December 31,
	2017			2016
	2018			2017
Commercial Business	$	1,~~285~~658,000		$	1,~~543~~285,000
Commercial and Multi-Family Real Estate		1619,~~503~~514,000			1416,~~428~~503,000
Residential Real Estate		3332,~~753~~774,000			3233,~~999~~753,000
Consumer and Other		~~683~~839,000			~~558~~683,000
		52,224,000			49,528,000
		54,785,000			52,224,000
Allowance for Loan Losses		(~~273~~282,000	)		(~~263~~273,000	)
Net Deferred Loan Fees		(1410,000	)		(1714,000	)
Loans, Net	$	5154,~~937~~493,000		$	4951,~~248~~937,000

Residential real estate loans at December 31, ~~2017~~2018 and ~~2016~~2017 ~~include~~included loans secured by one-to-four family, non-owner occupied properties of of $98,~~190~~662,000 and $9,~~493~~190,000, respectively.

At December 31, ~~2017~~2018 and ~~2016~~2017, construction loans were $24,~~076~~730,000 and $2,~~736~~076,000, respectively. Loans in process at December 31, ~~2017~~2018 and ~~2016~~2017 were $12,~~330~~533,000 and $21,~~299~~330,000, respectively.

F-19

note 5 loans and allowance for loan losses (continued)

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment method as of December 31, ~~2017~~2018 and ~~2016~~2017:

December 31, 2017	Commercial Business		Commercial and Multi-Family Real Estate		Residential Real Estate			Consumer and Other			Unallocated			Total
December 31, 2018	Commercial Business		Commercial and Multi-Family Real Estate		Residential Real Estate			Consumer and Other			Unallocated			Total
Allowance for Loan Losses:
Balance at Beginning of Year	$	3,000	$	37,000	$	181,000		$	3,000		$	39,000		$	263,000
Balance January 1, 2018	$	3,000	$	38,000	$	220,000		$	3,000		$	9,000		$	273,000
Provision for Loan Losses		-1,000		143,000		35(30,000	)		31,000			~~(30~~10,000	)		925,000
Loans Charged-Off		-		-		-(22,000	)		~~(4,000~~-	)		-			(422,000	)
Recoveries of Loans Previously Charged-Off		-		-		46,000			~~1,000~~-			-			56,000
Balance at End of Year	$	3,000	$	38,000	$	220,000		$	3,000		$	9,000		$	273,000
Balance December 31, 2018	$	4,000	$	81,000	$	174,000		$	4,000		$	19,000		$	282,000
Ending Balance: Individually Evaluated for Impairment	$	-	$	-	$	~~19,000~~-		$	-		$	-		$	~~19,000~~-
Ending Balance: Collectively Evaluated for Impairment	$	34,000	$	3881,000	$	~~201~~174,000		$	34,000		$	919,000		$	~~254~~282,000
Loans:
Ending Balance: Individually Evaluated for Impairment	$	-	$	-	$	~~101~~182,000		$	-					$	~~101~~182,000
Ending Balance: Collectively Evaluated for Impairment	$	1,~~285~~658,000	$	1619,~~503~~514,000	$	3332,~~652~~592,000		$	~~683~~839,000					$	5254,~~123~~603,000

December 31, 2016	Commercial Business			Commercial and Multi-Family Real Estate		Residential Real Estate			Consumer and Other			Unallocated			Total
December 31, 2017	Commercial Business			Commercial and Multi-Family Real Estate		Residential Real Estate			Consumer and Other			Unallocated			Total
Allowance for Loan Losses:
Balance at Beginning of Year	$	5,000		$	30,000	$	183,000		$	4,000		$	39,000		$	261,000
Balance January 1, 2017	$	3,000		$	37,000	$	181,000		$	3,000		$	39,000		$	263,000
Provision for Loan Losses		~~(2,000~~-	)		71,000		(535,000	)		-3,000			-(30,000	)		-9,000
Loans Charged-Off		-			-		-			(14,000	)		-			(14,000	)
Recoveries of Loans Previously Charged-Off		-			-		34,000			-1,000			-			35,000
Balance at End of Year	$	3,000		$	37,000	$	181,000		$	3,000		$	39,000		$	263,000
Balance December 31, 2017	$	3,000		$	38,000	$	220,000		$	3,000		$	9,000		$	273,000
Ending Balance: Individually Evaluated for Impairment	$	-		$	-	$	-19,000		$	-		$	-		$	-19,000
Ending Balance: Collectively Evaluated for Impairment	$	3,000		$	3738,000	$	~~181~~201,000		$	3,000		$	399,000		$	~~263~~254,000
Loans:
Ending Balance: Individually Evaluated for Impairment	$	-		$	-	$	~~199~~101,000		$	-					$	~~199~~101,000
Ending Balance: Collectively Evaluated for Impairment	$	1,~~543~~285,000		$	1416,~~428~~503,000	$	3233,~~800~~652,000		$	~~558~~683,000					$	4952,~~329~~123,000

F-20

note 5 loans and allowance for loan losses (continued)

The following tables show the loans allocated by management’s internal risk ratings:

Risk Profile by Risk Rating

December 31, 2017

Commercial Business

Commercial and Multi-Family Real Estate

Residential Real Estate

Consumer and Other

Total

December 31, 2018

Commercial Business

Commercial and Multi-Family Real Estate

Residential Real Estate

Consumer and Other

Total

Risk Rating:

Unclassified

1,~~285~~658,000

1619,~~349~~514,000

32,~~849~~226,000

~~683~~839,000

5154,~~166~~237,000

Special Mention

~~154,000~~-

~~620~~198,000

~~774~~198,000

Substandard

~~284~~350,000

Total

1,~~285~~658,000

1619,~~503~~514,000

3332,~~753~~774,000

~~683~~839,000

5254,~~224~~785,000

Risk Profile by Risk Rating

December 31, 2016

Commercial Business

Commercial and Multi-Family Real Estate

Residential Real Estate

Consumer and Other

Total

December 31, 2017

Commercial Business

Commercial and Multi-Family Real Estate

Residential Real Estate

Consumer and Other

Total

Risk Rating:

Unclassified

1,~~540~~285,000

1416,~~428~~349,000

32,~~269~~849,000

~~557~~683,000

4851,~~794~~166,000

Special Mention

~~3,000~~-

-154,000

~~118~~620,000

~~121~~774,000

Substandard

~~612~~284,000

~~1,000~~-

~~613~~284,000

Total

1,~~543~~285,000

1416,~~428~~503,000

3233,~~999~~753,000

~~558~~683,000

4952,~~528~~224,000

The following tables show the aging analysis of the loan portfolio by time past due:

	Accruing Interest
December 31, 2017	Current		30-89 Days Past Due		90 Days or More Past Due		Total Nonaccrual		Total Loans
December 31, 2018		Current		30-89 Days Past Due		90 Days or More Past Due		Total Nonaccrual		Total Loans
Commercial Business	$	1,~~285~~658,000	$	-	$	-	$	-	$	1,~~285~~658,000
Commerical and Multi-Family Real Estate		1619,~~503~~514,000		-		-		-		1619,~~503~~514,000
Residential Real Estate		3332,~~346~~174,000		~~306~~284,000		71134,000		30182,000		3332,~~753~~774,000
Consumer and Other		~~683~~839,000		-		-		-		~~683~~839,000
	$	5154,~~817~~185,000	$	~~306~~284,000	$	71134,000	$	30182,000	$	5254,~~224~~785,000

December 31, 2016
December 31, 2017
Commercial Business	$	1,~~543~~285,000	$	-	$	-	$	-	$	1,~~543~~285,000
Commerical and Multi-Family Real Estate		1416,~~428~~503,000		-		-		-		1416,~~428~~503,000
Residential Real Estate		3233,~~650~~346,000		~~150~~306,000		-71,000		~~199~~30,000		3233,~~999~~753,000
Consumer and Other		~~556~~683,000		~~2,000~~-		-		-		~~558~~683,000
	$	4951,~~177~~817,000	$	~~152~~306,000	$	-71,000	$	~~199~~30,000	$	4952,~~528~~224,000

F-21

note 5 loans and allowance for loan losses (continued)

Interest income that would have been recorded for the years ended December 31, ~~2017~~2018 and ~~2016~~2017 had nonaccrual loans been current according to their original terms, amounted to $59,000 and $265,000, respectively. Interest income of $28,000 was recognized on nonaccrual ~~loans~~ loans during the year ended December 31, ~~2017~~2018 and $552,000 was recognized for the year ended December 31, ~~2016~~2017.

The following tables present information related to impaired loans:

December 31, 2018	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized

Loans With No Related Allowance Recorded:
Residential Real Estate	$	182,000	$	187,000	$	-	$	150,000	$	8,000
Total Loans With No Related Allowance Recorded	$	182,000	$	187,000	$	-	$	150,000	$	8,000

Loans With an Allowance Recorded:
Residential Real Estate	$	-	$	-	$	-	$	-	$	-

Total Impaired Loans:
Residential Real Estate	$	182,000	$	187,000	$	-	$	150,000	$	8,000
Total	$	182,000	$	187,000	$	-	$	150,000	$	8,000

December 31, 2017	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized

Loans With No Related Allowance Recorded:
Residential Real Estate	$	30,000	$	32,000	$	-	$	81,000	$	2,000
Total Loans With No Related Allowance Recorded	$	30,000	$	32,000	$	-	$	81,000	$	2,000

Loans With an Allowance Recorded:
Residential Real Estate	$	71,000	$	71,000	$	19,000	$	71,000	$	2,000

Total Impaired Loans:
Residential Real Estate	$	101,000	$	103,000	$	19,000	$	152,000	$	4,000
Total	$	101,000	$	103,000	$	19,000	$	152,000	$	4,000

December 31, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Loans With No Related Allowance Recorded:
Residential Real Estate	$	199,000	$	202,000	$	-	$	271,000	$	-
Total Loans With No Related Allowance Recorded	$	199,000	$	202,000	$	-	$	271,000	$	-
Loans With an Allowance Recorded:
Residential Real Estate	$	-	$	-	$	-	$	-	$	-
Total Impaired Loans:
Residential Real Estate	$	199,000	$	202,000	$	-	$	271,000	$	-
Total	$	199,000	$	202,000	$	-	$	271,000	$	-

The Company does not have material commitments to lend additional funds to borrowers with loans whose terms have been modified in troubled debt restructurings (TDRs) or whose loans are on nonaccrual.

There were no loans modified in TDRs for the years ended December 31, ~~2017~~2018 and ~~2016~~2017.

As of December 31, ~~2017~~2018, ~~the~~Central ~~Company~~Federal had one residential real estate loan in the process of foreclosure with a balance of $7168,000. At December 31, ~~2016~~2017, there ~~were~~was noone residential real estate ~~loans~~loan in the process of foreclosure with a balance of $71,000.

F-22

Note 6 foreclosed assets

Activity in foreclosed assets is as follows:

	Year Ended December 31,
	2017			2016
	2018			2017
Balance at Beginning of Year	$	~~26,000~~-		$	~~608~~26,000
Additions		82135,000			-82,000
Loan to Facilitate Sale		-			(209,000	)
Capitalized Improvements		16,000			-
Proceeds from Sale		~~(130,000~~-	)		(~~359~~130,000	)
Gain (loss) on Sale		22,000			(14,000	)
Gain on Sale		-			22,000
Balance at End of Year	$	-		$	26,000
Valuation Write-downs		(8,000	)		-
Balance at End of Year	$	143,000		$	-

Foreclosed assets by property type are as follows:

	Year Ended December 31,
	2017		2016
	2018		2017
Residential Real Estate	$	-143,000	$	~~26,000~~-
	$	-143,000	$	~~26,000~~-

note 7 PREMISES AND EQUIPMENT

Components of premises and equipment are as follows:

	Year Ended December 31,
	2017		2016
	2018		2017
Land	$	229,000	$	229,000
Building and Improvements		1,062,000		1,~~049~~062,000
Furniture, Fixtures and Equipment		~~581~~542,000		~~510~~581,000
		1,872,000		1,788,000
		1,833,000		1,872,000
Less: Accumulated Depreciation		1,~~162~~116,000		1,~~154~~162,000
Premises and Equipment, Net	$	~~710~~717,000	$	~~634~~710,000

note 8 DEPOSITS

Deposits consist of the following:

	December 31,
	2017		2016
	2018		2017
Noninterest-Bearing Demand Deposits	$	3,~~181~~724,000	$	3,~~474~~181,000
Interest-Bearing Demand Deposits		2018,~~498~~325,000		20,~~630~~498,000
Savings		3,~~649~~939,000		3,~~435~~649,000
Certificates of Deposit, $100,000 or more		36,~~233~~567,000		63,~~771~~233,000
Certificates of Deposit, less than $100,000		11,~~075~~227,000		11,~~913~~075,000
Total	$	4143,~~636~~782,000	$	4641,~~223~~636,000

Under the Federal Deposit Insurance Act and the FDIC’s implementing regulations, $250,000 is the standard maximum deposit insurance amount for deposits in an insured depository institution that are maintained in the same ownership right and capacity. Deposits maintained in different rights and capacities are insured separately from each other. Time deposits of $250,000 or more were $1,888,000 on December 31, 2018 and $667,000 on December 31, 2017.

F-23

note 8 DEPOSITS (~~ContinuED~~CONTINUED)

As of December 31, ~~2017~~2018, the scheduled maturities of certificates of deposit ~~are~~were as follows:

	December 31, 2017
	December 31, 2018
Certificates of Deposit:
2018	$	7,846,000
2019	$	7,668,000
2019		1,682,000
2020		3,105,000
2020		1,097,000
2021		2,076,000
2021		1,821,000
2022		1,891,000
2022		1,851,000
2023		3,045,000
Thereafter		119,000
Total	$	1417,~~308~~794,000

Deposit interest expense consisted of the following:

	Year Ended December 31,
	2017		2016
	2018		2017
NOW and Money Market Deposit Accounts	$	~~104~~102,000	$	~~110~~104,000
Savings		12,000		1112,000
Certificates of Deposit		~~171~~213,000		~~238~~171,000
Total	$	~~287~~327,000	$	~~359~~287,000

NOTE 9 federal home loan bank and federal Reserve Bank advances

The Company has entered into an Advances, Pledges, and Security Agreement with the FHLB whereby mortgage loans have been pledged with a maximum borrowing capacity of $2731,~~054~~534,000 and $2027,~~504~~054,000 at December 31, ~~2017~~2018 and ~~2016~~2017, respectively. At December 31, ~~2017~~2018 and ~~2016~~2017, the Company did not have any advances.

The Company has entered into a Borrower in Custody Arrangement with the Federal Reserve Bank of St. Louis (FRB). The Company has pledged commercial and consumer loans of approximately $5,~~741~~961,000 and $45,~~189~~741,000 at December 31, ~~2017~~2018 and ~~2016~~2017, respectively. At December 31, ~~2017~~2018 and ~~2016~~2017, the Company did not have any advances from the FRB.

The Company has overnight borrowing capacity of $35 million in place with ~~Zion~~TIB Bank. At December 31, ~~2017~~2018 and ~~2016~~2017, the Company did not have any advances from ~~Zion~~TIB Bank.

note 10 Related party transactions

In the ordinary course of business, the Company has granted loans to officers, directors, and their affiliates (related parties). Activity associated with loans made to related parties are as follows:

	December 31,
	2017			2016
Balance at Beginning of Year	$	3,255,000		$	2,198,000
Change in Related Parties		-			-
New Loans and Advances		120,000			1,893,000
Repayments		(437,000	)		(836,000	)
Balance at End of Year	$	2,938,000		$	3,255,000

F-24

note 10 Related party transactions ~~(CONTINUED)~~

~~Deposits~~In ~~from~~the ~~related~~ordinary ~~parties~~course ~~held~~of bybusiness, the Company ~~were~~has $1granted loans to officers,~~777~~ directors,~~000~~ and ~~$1,574,000~~their ataffiliates ~~December~~(related ~~31,~~parties). Activity ~~2017~~associated ~~and~~with ~~2016,~~loans ~~respectively.~~made to related parties is as follows:

	2018			2017

Balance at Beginning of Year	$	2,938,000		$	3,255,000
Change in Related Parties		-			-
New Loans and Advances		487,000			120,000
Repayments		(249,000	)		(437,000	)
Balance at End of Year	$	3,176,000		$	2,938,000

Deposits from related parties held by the Company were $1,994,000 and $1,777,000 at December 31, 2018 and 2017, respectively.

note 11 INCOME TAXES

The income tax benefit includes these components:

	2017			2016
	2018			2017
Taxes currently payable (receivable)	$	(727,000	)	$	8(7,000	)
Adjustment of deferred tax asset or liability for enacted changes in tax laws		39,000			-
Adjustment of deferred tax asset or liability for enacted
Deferred income taxes		(37,000	)		(67,000	)
changes in tax laws		-			39,000
	$	(5,000	)	$	(59,000	)
Deferred income taxes		(2,000	)		(37,000	)
	$	25,000		$	(5,000	)

A reconciliation of income tax benefit at the statutory rate to the Company’s actual income tax benefit is shown below:

	2017			2016
	2018			2017
Computed at the statutory rate (34%)	$	(5,000	)	$	(317,000	)
Computed at the statutory rate (2018 - 21%; 2017 - 34%)	$	13,000		$	(5,000	)
Increase (decrease) resulting from
Graduated tax rates		~~2,000~~-			122,000
Tax exempt income		(42,000	)		(4,000	)
State tax, net of federal tax benefit		813,000			58,000
Deductible organization costs		(2113,000	)		(21,000	)
Increase (decrease) in valuation allowance		-			236,000
Adjustment of deferred tax asset or liability for enacted changes in tax laws		-			39,000
Tax rate differential on valuation allowance		-			32,000
Other		14,000			(24,000	)
Adjustment of deferred tax asset or liability for enacted changes in tax laws		39,000			-
	$	25,000		$	(5,000	)
Other		(24,000	)		(2,000	)
	$	(5,000	)	$	(59,000	)
Effective tax rate		35.7	%		6.3	%

On December 22, 2017, the Tax Cuts and Jobs Act legislation was enacted, which significantly changes the existing U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%, effective January 1, 2018, as well as other changes. As a result of enactment of the legislation, the Company incurred an additional one-time income tax expense of $39,000 during the fourth quarter of fiscal year 2017, primarily related to the remeasurement of certain deferred tax assets and liabilities. The new legislation is complex and requires significant detailed analysis. We do not currently expect significant adjustments will be necessary, but any further adjustments identified will be recognized in accordance with guidance contained in Staff Accounting Bulletin No. 118 from the U.S. Securities and Exchange Commission.

F-25

note 11 INCOME TAXES (CONTINUED)

On December 22, 2017, the Tax Cuts and Jobs Act legislation was enacted, which significantly changed the existing U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%, effective January 1, 2018, as well as other changes. As a result of the enactment of the legislation, the Company incurred an additional one-time income tax expense of $39,000 during the fourth quarter of 2017 related to the remeasurement of certain deferred tax assets and liabilities. The new legislation is complex and requires significant detailed analysis. We did not incur any further significant adjustments in 2018 related to this new legislation.

The tax effects of temporary differences related to deferred taxes shown on the balance sheet were:

	2017			2016
	2018			2017
Deferred tax assets
Allowance for loan losses	$	6770,000		$	7967,000
ESOP contribution		1014,000			610,000
Deferred loan fees		3,000			53,000
Unrealized losses on securities available-for-sale		2859,000			4528,000
Nonaccrual loan interest		12,000			1,000
Charitable contribution carryforwards		~~166~~165,000			~~236~~166,000
Net operating loss carryforward		6659,000			66,000
		341,000			438,000
		372,000			341,000
Deferred tax liabilities
Accumulated depreciation		~~(9,000~~-	)		(9,000	)
Other		(1219,000	)		(1912,000	)
		(21,000	)		(28,000	)
		(19,000	)		(21,000	)
Net deferred tax asset before valuation allowance		~~320~~353,000			~~410~~320,000
Valuation allowance
Beginning balance		(~~236~~165,000	)		-(236,000	)
Adjustment of valuation allowance for enacted changes in tax laws		~~71,000~~-			-71,000
(Increase) decrease during the period		-			(236,000	)
Ending balance		(165,000	)		(165,000	)
Ending balance		(165,000	)		(236,000	)
Net deferred tax asset	$	188,000		$	155,000
Net deferred tax asset	$	155,000		$	174,000

At December 31, ~~2017~~2018, the Company had approximately $~~300~~245,000 of net operating loss carry forward that will begin to expire in 2036. In connection with the offering of common stock in 2016 the Company contributed to the Central Federal Community Foundation $100,000 in cash and common stock with a fair value of $687,700 (68,770 shares at the $10.00 offering price) for a total contribution of $787,700. For Federal income tax purposes, the deduction for charitable contributions is subject to certain annual limitations with unused contributions carried forward five years subject to the same annual limitations.

InAt ~~connection~~December ~~with~~31, ~~the~~2018 ~~offering~~and ~~of common stock~~2017, ~~in 2016~~ the Company ~~contributed~~had torecorded ~~the Central Federal Community Foundation $100,000 in cash and common stock with~~ a ~~fair~~valuation ~~value~~allowance ofagainst ~~$687,700 (68,770 shares at~~ the ~~$10.00~~entire ~~offering~~deferred ~~price)~~tax ~~for~~asset arelated ~~total~~to this contribution ~~of $787,700~~carryforward. ~~For~~The ~~Federal~~Company ~~income~~has ~~tax~~determined ~~purpose,~~it ~~the deduction for charitable contributions~~ is ~~subject~~more tolikely ~~certain~~than ~~annual~~not ~~limitations with~~that ~~unused~~this ~~contributions~~deferred ~~carried~~tax ~~forward~~asset ~~five~~will ~~years~~not ~~subject~~be ~~to the same annual limitations~~realized.

At December 31, 2017 and 2016, the Company had recorded a valuation allowance against the entire deferred tax asset related to this contribution carryforward. The Company has determined it is more likely than not that this deferred tax asset will not be realized.

Retained earnings includes certain tax bad debt reserves for which no deferred income tax liability has been recognized. These reserves represent an allocation of income to bad debt deductions for tax purposes only for tax years prior to 1988. If these tax bad debt reserves are used for other than loan losses, the amount used will be subject to income taxes at the then prevailing corporate rate.

F-26

note 12 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the Company has outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying financial statements. Central Federal’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are included in the statements of financial condition.

The following financial instruments whose contract amount represents credit risk were approximately as follows:

	December 31,
	2017			2016
	2018			2017
Commitments to Extend Credit	$	37,~~759~~949,000		$	23,~~760~~759,000
Standby Letters of Credit		-			-
	$	37,~~759~~949,000		$	23,~~760~~759,000
Range of Rates on Fixed Rate Commitments		2.0025-6.~~00%~~77	%		2.00-46.~~75%~~00	%

F-26

note 12 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (CONTINUED)

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case by case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit.

Central Federal was not required to perform on any financial guarantees and did not incur any losses on its commitments.

NOTE 13 EMPLOYEE BENEFITS

On January 12, 2016, the Company announced the formation of the ESOP, a non-contributory plan for its employees. All employees of the Company meeting certain tenure requirements are entitled to participate in the ESOP.

The ESOP was originally established and funded with the purchase of 143,042 shares of common stock using the proceeds in the ~~offering~~ offering completed on January 12, 2016. The Company is making quarterly payments of principal and interest over a term of 100 ~~quarters~~ quarters and the unpaid principal has an annual interest rate of 3.50%. Dividends paid on unallocated stock will also be applied as a payment. The trustee holds unallocated shares purchased by the ESOP in a loan suspense account and will release the shares of common stock on a pro rata basis each quarter as payments are made. Released shares ~~will~~are be allocated among active participants on the basis of each active participant’s proportional share of compensation. Compensation expense related to the ESOP was $7579,000 and $6675,000 for the ~~year~~years ended December 31, ~~2017~~2018 and ~~2016~~2017, respectively.

A summary of Central Federal’s ESOP is as follows at December 31, 2017 and 2016:

	2017		2016
Allocated Shares		5,720		-
Shares released for Allocation		5,720		5,720
Unallocated Shares		131,602		137,322
Total ESOP Shares		143,042		143,042
Fair value of unallocated shares at December 31	$	1,829,000	$	1,751,000

At December 31, 2017, the fair value of the 11,440 shares allocated or released for allocation under the ESOP was $159,000 and is reported on the balance sheet as mezzanine capital. The fair value of all shares subject to the repurchase obligation is $1,988,000.

The Company previously offered a Savings Incentive Match Plan (SIMPLE IRA) plan for full-time employees, under which a participant could elect to make pre-tax contributions up to the maximum amount allowed by the Internal Revenue Service. The Company made matching contributions to participants as defined by the plan of $19,000 and $10,000 for the years ended December 31, 2017 and 2016, respectively. There were no vesting requirements.

F-27

NOTE 13 EMPLOYEE BENEFITS (CONTINUED)

A summary of Central Federal’s ESOP is as follows for 2018 and 2017:

	2018		2017
Allocated Shares		11,440		5,720
Shares released for Allocation		5,720		5,720
Unallocated Shares		125,882		131,602
Total ESOP Shares		143,042		143,042

Fair value of unallocated shares at December 31	$	1,775,000	$	1,829,000

At December 31, 2018, the fair value of the 17,160 allocated shares and shares released for allocation held by the ESOP was $242,000 and was reported on the balance sheet as mezzanine capital. The fair value of all shares subject to the repurchase obligation is $2,017,000.

The Company previously offered a Savings Incentive Match Plan (SIMPLE IRA) plan for full-time employees, under which a participant could elect to make pre-tax contributions up to the maximum amount allowed by the Internal Revenue Service. The Company made matching contributions to participants as defined by the plan of $4,000 and $19,000 for the years ended December 31, 2018 and 2017, respectively. There were no vesting requirements. This plan terminated during 2018.

In 2017, shareholders approved the Company’s 2017 Equity Incentive Plan (“2017 Plan”). Each employee and director of the Company and Central Federal is eligible to participate in the 2017 Plan. The 2017 Plan reserves a total of 240,695 shares of common stock for issuance, of which up to 68,770 shares may be granted in the form of restricted stock awards and up to 171,925 shares may be granted in the form of stock options. No shares had been granted under the 2017 Plan as of December 31, 2018.

note 14 REGULATORY MATTERS

Central Federal is subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Central Federal must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not generally applicable to savings and loan holding companies.

As of December 31, ~~2017~~2018, the most recent notification from the banking regulators categorized Central Federal as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, Central Federal must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed Central Federal’s category.

Quantitative measures established by regulation to ensure capital adequacy require Central Federal to maintain minimum amounts and ratios set forth in the following table. Management believes, as of December 31, ~~2017~~2018 and ~~2016~~2017, that the Company met all its capital adequacy requirements.

F-28

note 14 REGULATORY MATTERS (CONTINUED)

Central Federal’s capital amounts and ratios are presented in the following table.

	Actual					Minimum Capital Requirement					Minimum to be Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2018
Total Capital to Risk Weighted Assets	$	21,127,000		46.7	%	$	3,618,000		8.0	%	$	4,523,000		10.0	%
Tier 1 Capital to Risk Weighted Assets	$	20,845,000		46.1	%	$	2,714,000		6.0	%	$	3,618,000		8.0	%
Common Equity Tier 1 Capital to Risk
Weighted Assets	$	20,845,000		46.1	%	$	2,035,000		4.5	%	$	2,940,000		6.5	%
Tier 1 Capital to Average Assets	$	20,845,000		29.9	%	$	2,786,000		4.0	%	$	3,483,000		5.0	%
December 31, 2017
Total Capital to Risk Weighted Assets	$	20,759,000		51.5	%	$	3,226,~~400~~000		8.0	%	$	4,033,000		10.0	%
Tier I Capital to Risk Weighted Assets		20,597,000		51.1	%		2,419,800		6.0	%		3,226,400		8.0	%
Tier 1 Capital to Risk Weighted Assets	$	20,597,000		51.1	%	$	2,420,000		6.0	%	$	3,226,000		8.0	%
Common Equity Tier I Capital to Risk Weighted Assets		20,597,000		51.1	%		1,814,850		4.5	%		2,621,450		6.5	%
Common Equity Tier 1 Capital to Risk
Tier I Capital to Average Assets		20,597,000		30.2	%		2,731,480		4.0	%		3,414,350		5.0	%
Weighted Assets	$	20,597,000		51.1	%	$	1,815,000		4.5	%	$	2,621,000		6.5	%
December 31, 2016
Tier 1 Capital to Average Assets	$	20,597,000		30.2	%	$	2,731,000		4.0	%	$	3,414,000		5.0	%
Total Capital to Risk Weighted Assets	$	20,628,000		53.5	%	$	3,082,000		8.0	%	$	3,853,000		10.0	%
Tier I Capital to Risk Weighted Assets		20,366,000		52.9	%		2,312,000		6.0	%		3,082,000		8.0	%
Common Equity Tier I Capital to Risk Weighted Assets		20,366,000		52.9	%		1,734,000		4.5	%		2,504,000		6.5	%
Tier I Capital to Average Assets		20,366,000		27.0	%		3,014,000		4.0	%		3,767,000		5.0	%

The Basel III Capital Rules establish a “capital conservation buffer” of 2.5% above the risk-based capital ratios, shown in the table above, which is being phased in at 0.625% of risk-weighted assets each year beginning in January 2016.

On ~~April~~November 527, ~~2017~~2018, the Company announced that its Board of Directors adopted a new stock repurchase program,. ~~under~~Under ~~which~~ the ~~Company~~new isrepurchase ~~authorized~~program, tothe Company may repurchase up to ~~178~~80,~~802~~296 shares of its common stock. Under the share repurchase program announced June 22, or2018, ~~approximately~~which ~~10%~~was terminated upon the adoption of the ~~current~~new ~~outstanding~~program, the Company repurchased 54,300 shares. As of of December, 31, ~~2017~~2018, the Company had repurchased ~~112~~195,100 shares.

F-28

note 15 FAIR VALUE MEASUREMENTS

The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows:

F-29

note 15 FAIR VALUE MEASUREMENTS (CONTINUED)

Level 1 – Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that an entity has the ability to access.

Level 2 – Inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Fair values for these instruments are estimated using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Level 3 – Inputs that are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

Subsequent to initial recognition, the Company may remeasure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value.

Professional standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy to value certain financial instruments at fair value. The Company has not elected to measure any existing financial instruments at fair value; however, it may elect to measure newly acquired financial instruments at fair value in the future.

Recurring Basis

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following tables present the balances of assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3		Total
December 31, 2018
Securities Available-for-Sale:
Mortgage Backed Securities	$	-	$	3,975,000	$	-	$	3,975,000
Small Business Administration Pools		-		795,000		-		795,000
Municipal Obligation		-		402,000		-		402,000
Federal Home Loan Mortgage Corp. Stock		17,000		-		-		17,000
	$	17,000	$	5,172,000	$	-	$	5,189,000
December 31, 2017
Securities Available-for-Sale:
Mortgage Backed Securities	$	-	$	4,883,000	$	-	$	4,883,000
Small Business Administration Pools		-		885,000		-		885,000
Municipal Obligation		-		412,000		-		412,000
Federal Home Loan Mortgage Corp. Stock		40,000		-		-		40,000
	$	40,000	$	6,180,000	$	-	$	6,220,000
December 31, 2016
Securities Available-for-Sale:
Mortgage Backed Securities	$	-	$	5,182,000	$	-	$	5,182,000
Small Business Administration Pools		-		954,000		-		954,000
Municipal Obligation		-		403,000		-		403,000
Federal Home Loan Mortgage Corp. Stock		42,000		-		-		42,000
	$	42,000	$	6,539,000	$	-	$	6,581,000

The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.

F-29

note 15 FAIR VALUE MEASUREMENTS (CONTINUED)

Securities

When available, the Company uses quoted market prices to determine the fair value of securities; such items are classified in Level 1 of the fair value hierarchy. For the Company’s securities for which quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds for which no price is observable or may compile prices from various sources. Level 2 inputs consider observable data that may include dealer quotes, market spread, cash flows, treasury yield curve, trading levels, credit information and terms, among other factors.

F-30

note 15 FAIR VALUE MEASUREMENTS (CONTINUED)

Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as there is evidence of impairment or a change in the amount of previously recognized impairment.

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, ~~2017~~2018 and ~~2016~~2017:

	Level 1		Level 2		Level 3
December 31, 2018
Impaired Loans	$	-	$	-	$	-
Foreclosed Assets		-		-		63,000
December 31, 2017
Impaired Loans	$	-	$	-	$	82,000
December 31, 2016
Impaired Loans	$	-	$	-	$	-

The impaired loans above that required Level 3 adjustments during 2017 consisted of specific valuation allowances of $19,000. ~~There were no impairment losses on impaired loans in 2016.~~

The significant inputs used in the fair value measurements for Level 3 assets measured at fair value on the nonrecurring basis are as follows as of December 31, ~~2017~~2018, and December 31, ~~2016~~2017:

Valuation Techniques Unobservable ~~inputs~~Inputs Range (Average) Impaired Loans Evaluation of Collateral Estimation of Value NM*

* Not Meaningful. Evaluations of the underlying assets are completed for each impaired loan with a specific allowance. The types of collateral vary widely and could include accounts receivables, inventory, a variety of equipment, and real estate. Collateral evaluations are reviewed and discounted as appropriate based on knowledge of the specific type of collateral. In the case of real estate, an independent appraisal may be obtained. Types of discounts considered include aging of receivables, condition of the collateral and potential market for the collateral, and estimated disposal costs. These discounts will vary from loan to loan, thus providing a range would not be meaningful.

Foreclosed Assets

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Fair value is commonly based on recent real estate appraisals, which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Impaired Loans

In accordance with the provisions of the loan impairment guidance, impairment was measured for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, or discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. Impaired loans for which an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Collateral values are estimated using Level 3 inputs based on customized discounting criteria.

F-31

note 15 FAIR VALUE MEASUREMENTS (CONTINUED)

Impairment amounts on impaired loans represent specific valuation allowance and write-downs during the period presented on impaired loans that were individually evaluated for impairment based on the estimated fair value of the collateral less estimated selling costs, excluding impaired loans fully charged-off.

F-30

NOTE 16 fair value OF FINANCIAL INSTRUMENTS

Disclosure of fair value information about financial instruments, for which it is practicable to estimate that value, is required whether or not recognized in the statements of financial condition. In cases in which quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimate of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Certain financial instruments with a fair value that is not practicable to estimate and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not necessarily represent the underlying value of the Company.

The following disclosures represent financial instruments in which the ending balances at December 31, ~~2017~~2018 and ~~2016~~2017 are not carried at fair value in their entirety on the statements of financial condition.

Cash and Cash Equivalents and Accrued Interest Receivable

The carrying amounts reported in the statements of financial condition approximate those assets’ ~~and liabilities’~~ fair values. Accrued interest is primarily accrued interest from loans.

Certificates of Deposit in Other Financial Institutions

Fair values of certificates of deposit in other financial institutions are estimated using discounted cash flow analyses based on current rates for similar types of deposits.

Federal Home Loan Bank (“FHLB”) Stock, at Cost

The carrying amount of FHLB stock approximates its fair value based on the redemption provisions of the FHLB.

Loans

~~For~~In 2018, a new standard required a change in how the fair value of loans is determined, instead of entrance pricing, exit pricing must be used to determine fair value, or the price that would be received to sell an asset. In 2017, fair value for variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values of other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Deposits and Accrued Interest Payable

The fair values of demand deposits are, by definition, equal to the amount payable on demand at the balance sheet date. The fair values of fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies current incremental interest rates being offered on certificates of deposit to a schedule of aggregated expected monthly maturities of the outstanding certificates of deposit. Accrued interest payable carrying amount approximates its fair value.

F-32

note 16 FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

Off-Balance-Sheet Credit-Related Instruments

Off-Balance-Sheet Credit Related Instrument commitments are generally of a short-term nature. The contract amount of such commitments approximates their fair value since the commitments are comprised primarily of unfunded loan commitments which are generally priced at market at the time of funding.

F-31

NOTE 16 fair value OF FINANCIAL INSTRUMENTS (CONTINUED)

Fair Value of Financial Instruments

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows:

	December 31, 2017				December 31, 2016
	December 31, 2018				December 31, 2017
	Carrying		Fair		Carrying		Fair		Input
	Amount		Value		Amount		Value		Level
Financial Assets:
Cash and Cash Equivalents	$	24,~~925~~729,000	$	24,~~925~~729,000	$	122,~~199~~925,000	$	122,~~199~~925,000		1
Certificates of Deposit in Other Financial
Certificates of Deposit in Other Financial Institutions		3,224,000		3,224,000		5,699,000		5,699,000		2
Institutions		5,699,000		5,699,000		4,712,000		4,712,000		2
FHLB Stock		82,000		82,000		89,000		89,000		2
FHLB Stock		89,000		89,000		97,000		97,000		2
Loans, net		54,493,000		54,522,000		51,937,000		51,788,000		3
Loans, net		51,937,000		51,788,000		49,248,000		49,235,000		3
Accrued Interest Receivable		167,000		167,000		163,000		163,000		2
Accrued Interest Receivable		163,000		163,000		160,000		160,000		2
Financial Liabilities:
Deposits		4143,~~636~~782,000		4143,~~430~~416,000		4641,~~223~~636,000		4641,~~156~~430,000		3
Accrued Interest Payable		-1,000		-1,000		~~1,000~~-		~~1,000~~-		2

F-3233

NOTE 17 PARENT COMPANY ONLY FINANCIAL STATEMENTS

The following parent only balance sheets, statements of earnings and statements of cash flows for Central Federal Bancshares, Inc. should be read in conjunction with the consolidated financial statements and notes thereto.

Statement of Financial Condition

	December 31, 2017			December 31, 2016
	December 31, 2018			December 31, 2017
Assets
Cash and Cash Equivalents	$	43,~~387~~143,000		$	64,~~030~~387,000
Investment in Subsidiary		20,~~486~~671,000			20,~~262~~486,000
ESOP Note Receivable		1,~~355~~316,000			1,~~392~~355,000
Other Assets		~~173~~91,000			70104,000
Total Assets	$	2625,~~401~~221,000		$	2726,~~754~~332,000
Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity
Other Liabilitites	$	~~83,000~~-		$	114,000
Common Stock		18,000			18,000
Additional Paid-In Capital		16,~~464~~486,000			16,~~446~~464,000
Treasury Stock		(12,~~523~~660,000	)		-(1,523,000	)
Common Stock Aquired by ESOP		(1,~~316~~259,000	)		(1,~~373~~316,000	)
Accumulated Other Comprehensive Loss		(83175,000	)		(~~105~~83,000	)
Retained earnings - Substantially Restricted		12,~~758~~811,000			12,~~767~~758,000
Total Stockholders' Equity		26,318,000			27,753,000
Total Stockholders’ Equity		25,221,000			26,318,000
Total Liabilities and Stockholder's Equity	$	26,401,000		$	27,754,000
Total Liabilities and Stockholder’s Equity	$	25,221,000		$	26,332,000

~~F-33~~Statement of Operations

NOTE 17 PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONTINUED)

	For Year Ended			For Year Ended
	December 31, 2018			December 31, 2017

Interest Income on ESOP Note Receivable	$	47,000		$	48,000
Income in Subsidiary		179,000			128,000
Total Income		226,000			176,000

Noninterest Expense		220,000			258,000
Total Expenses		220,000			258,000

Income (Loss) before income taxes		6,000			(82,000	)
Income Tax Benefit		(29,000	)		(73,000	)
Net Income (Loss)	$	35,000		$	(9,000	)

	For Year Ended			For Year Ended
	December 31, 2017			December 31, 2016
Statement of Operations
Interest Income on ESOP Note Receivable	$	48,000		$	48,000
Income in Subsidiary		128,000			107,000
Total Income		176,000			155,000
Noninterest Expense		258,000			340,000
Contribution to Charitable Foundation		-			788,000
Total Expenses		258,000			1,128,000
Loss before income taxes		(82,000	)		(973,000	)
Income Tax Benefit		(73,000	)		(100,000	)
Net Income (Loss)	$	(9,000	)	$	(873,000	)

	For Year Ended			For Year Ended
	December 31, 2017			December 31, 2016
Statement of Cash Flows
Cash Flows from Operating Activities:
Net Loss	$	(9,000	)	$	(873,000	)
Adjustment to Reconcile Net Loss to Cash
Provided by Operating Activities:
Income in Subsidiary		(128,000	)		(107,000	)
Increase in Other Assets		(103,000	)		(70,000	)
Increase in Other Liabilities		82,000			1,000
Net cash used for operating activities		(158,000	)		(1,049,000	)
Cash Flows from Investing Activities:
Repayment of ESOP Loan		38,000			38,000
Capital Contribution to Subsidiary		-			(7,984,000	)
Net cash provided by (used for) investing activities		38,000			(7,946,000	)
Cash Flows from Financing Activities:
Proceeds from Issuance of Common Stock		-			15,025,000
Purchase of Treasury Stock		(1,523,000	)		-
Net Cash provided by (Used In) Financing Activities		(1,523,000	)		15,025,000
NET CHANGE IN CASH AND CASH EQUIVALENTS		(1,643,000	)		6,030,000
Cash and Cash Equivalents at Beginning of Year		6,030,000			-
Cash and Cash Equivalents at End of Year	$	4,387,000		$	6,030,000

F-34

NOTE 17 PARENT COMPANY ONLY FINANCIAL STATEMENTS (CONTINUED)

Statement of Cash Flows

	For Year Ended			For Year Ended
	December 31, 2018			December 31, 2017

Cash Flows from Operating Activities:
Net Income (Loss)	$	35,000		$	(9,000	)
Adjustment to Reconcile Net Income (Loss) to Cash
Provided by Operating Activities:
Income in Subsidiary		(179,000	)		(128,000	)
Decrease (Increase) in Other Assets		12,000			(34,000	)
Increase (Decrease) in Other Liabilities		(14,000	)		13,000
Net Cash used for Operating Activities		(146,000	)		(158,000	)
Cash Flows from Investing Activities:
Repayment of ESOP Loan		39,000			38,000
Net Cash provided by Investing Activities		39,000			38,000
Cash Flows from Financing Activities:
Purchase of Treasury Stock		(1,137,000	)		(1,523,000	)
Net Cash used in Financing Activities		(1,137,000	)		(1,523,000	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(1,244,000	)		(1,643,000	)
Cash and Cash Equivalents at Beginning of Year		4,387,000			6,030,000
Cash and Cash Equivalents at End of Year	$	3,143,000		$	4,387,000

F-35

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Central Federal Bancshares, Inc.
Date: March 28, 2018	By:	/s/ William A. Stoltz
Date: March 27, 2019	By:	/s/ William A. Stoltz
		William A. Stoltz
		President and Chief Executive Officer

Signatures

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William A. Stoltz and Barbara E. Hamilton, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resolution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	Title	Date
/s/ William A. Stoltz	President and Chief Executive Officer	March 2827, ~~2018~~2019
William A. Stoltz	(principal executive officer)
/s/ Angela E. Medwick	Chief Financial Officer	March 2827, ~~2018~~2019
Angela E. Medwick	(principal financial and accounting officer)
/s/ Michael E. Estey	Chairman of the Board of Directors and Director	March 2827, ~~2018~~2019
Michael E. Estey
/s/ Stephen L. Bowles	Director	March 2827, ~~2018~~2019
Stephen L. Bowles
/s/ Jeffrey L. McKune	Director	March 2827, ~~2018~~2019
Jeffrey L. McKune
/s/ Larry D. Thomas	Director	March 2827, ~~2018~~2019
Larry D. Thomas
/s/ James R. Sowers	Director	March 2827, ~~2018~~2019
James R. Sowers
/s/ Robert R. Thompson	Director	March 2827, ~~2018~~2019
Robert R. Thompson
/s/ John D. Wiggins	Director	March 2827, ~~2018~~2019
John D. Wiggins

F-35

Exhibit Index

Exhibit No.		Description
3.1		Articles of Incorporation of Central Federal Bancshares, Inc.(1)
3.2		Bylaws of Central Federal Bancshares, Inc.(1)
4.1		Specimen Common Stock Certificate of Central Federal Bancshares, Inc.(1)
10.1		Employment Agreement, dated January 12, 2016, between Central Federal Bancshares, Inc., Central Federal Savings and Loan Association of Rolla and William A. Stoltz*(2)
10.2		Change in Control Agreement, dated January 12, 2016, between Central Federal Savings and Loan Association of Rolla and Barbara Hamilton*(2)
10.3		Central Federal Bancshares, Inc. 2017 Equity Incentive Plan*(3)
14.1		Code of Ethics(3)
14.1		Code of Ethics(4)
21.1		Subsidiaries
24.1		Power of Attorney (included on signature ~~pages~~page)
31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) Certification)
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)/15d-14(a) Certification)
32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350 Certification)
101.1		The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition,; (ii) the Consolidated Statements of Income (Loss); (iii) the Consolidated Statements of Comprehensive Income (Loss); (iv) the Consolidated Statements of Stockholders’ Equity,; (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements

*	Management contract or compensatory agreement or arrangement.
(1)	Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. 333-206874), as amended, initially filed with the Securities and Exchange Commission on September 11, 2015.
(2)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2015 (File No. 000-55553).
(3)	Incorporated by reference to Appendix A to the Company’s Proxy Statement for its 2017 Annual Meeting of Shareholders filed on April 7, 2017 (File No. 000-55553).
(4)	Persons interested in obtaining a copy of the Company’s Code of Ethics may do so by writing to the Company at: Central Federal Bancshares, Inc., 210 West 10th Street, Rolla, Missouri 65401, Attention: Secretary.

* Management contract or compensatory agreement or arrangement.

F(1) Incorporated by reference to the Company’s Registration Statement on Form S-361 (File No. 333-206874), as amended, initially filed with the SEC on September 11, 2015.

(2)	Incorporated by reference to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2015 (File No. 000-55553).

(3)	Persons interested in obtaining a copy of the Company’s Code of Ethics may do so by writing to the Company at: Central Federal Bancshares, Inc., 210 West 10th Street, Rolla, Missouri 65401, Attention: Secretary.

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