CENTRAL FEDERAL CORPORATION

7000 N. High Street

Worthington, Ohio 43085

(614) 334-7979

cfbankonline.com





PROXY STATEMENT

FOR THE SPECIALANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 8, 2014MAY 31, 2017





INFORMATION CONCERNING SOLICITATION AND VOTING

This Proxy Statement is being furnished in connection with the solicitation by the Board of Directors of Central Federal Corporation (the “Company”) of proxies to be voted at a Specialthe Annual Meeting of Stockholders of the Company (the “Special Meeting”“Meeting”) to be held at J. Liu Restaurant (Worthington Room) locatedthe New Albany County Club, 1 Club Lane, New Albany, Ohio 43054, at 6880 N. High Street, Worthington, Ohio 43085, on Monday, September 8, 2014, at 10:3000 a.m., local time, on May 31, 2017, and at any and all postponements or adjournmentsadjournment(s) thereof.  Your vote is very important.  This Proxy Statement, and the accompanying proxy card and the 2016 Annual Report to Stockholders are being first sent or given on or about _________, 2014April 26, 2017 to stockholders of record atof the Company as of the close of business on July 25, 2014.

Your vote is very important.April 17, 2017.  The Board of Directors encourages you to read this Proxy Statement thoroughly and to take this opportunity to vote on the matters to be decided at the Special Meeting. 



This Proxy Statement, and the form of proxy card and the Company’s 2016 Annual Report to Stockholders are also available at http://CFBankonline.com/secproxy.CFBankonline.com.   





ATTENDING THE MEETING AND VOTING PROCEDURES AND ATTENDING THE SPECIAL MEETING





WHO MAY ATTEND THE SPECIAL MEETING?

If you are a stockholder of record as of the close of business on July 25, 2014April 17, 2017 (the “Record Date”), you are entitled to attend the Special Meeting.  Please note, however, that if you hold your shares in street name (i.e., you are a beneficial owner of shares of Company common stock that are held by a broker, bank or other nominee), you will need proof of ownership to be admitted to the Special Meeting.  See “HOW DO I VOTE” and “Must I VOTE BY proxy or may I vote in person at the SPECIALannual meeting?” for additional information. 



WHO IS ENTITLED TO VOTE?

You are entitled to vote your shares of common stock at the Special Meeting if the Company’s records show that you held your shares as of the close of business on the Record Date.  As of the close of business on the Record Date, a total of [15,823,710]16,288,577 shares of common stock of the Company were outstanding and entitled to vote.  Each share of common stock is entitled to one vote on each matter presented at the Special Meeting, except as described below.



As provided in the Company’s Certificate of Incorporation, as amended (“Certificate of Incorporation”), record holders of common stock that is beneficially owned, either directly or indirectly, by a person (either a natural person or an entity) who, as of the close of business on the Record Date, beneficially owned a total number of shares of common stock in excess of 10% of the outstanding shares of common stock (the “10% limit”) are not entitled to vote any of their shares that are in excess of the 10% limit, and those shares are not treated as outstanding for voting purposes.  For purposes of calculating the 10% limit, a person is deemed to beneficially own shares owned by an affiliate of, as well as by persons acting in concert with, such person.  The Company’s Certificate of Incorporation, as amended, authorizes the Board of Directors to (i) to make all determinations necessary to implement and apply the 10% limit, including determining whether persons are acting in concert, and (ii) to demand that any person who is reasonably believed to beneficially own stock in excess of the 10% limit supply information to the Company to enable the Board of Directors to implement and apply the 10% limit.  As of the Record Date, the Company was not aware of any person who beneficially owned more than 10% of the Company’s outstanding common stock. 

Shares of Series B Preferred Stock of the Company are not entitled to be voted on any of the matters to be voted on at the Meeting.



HOW DO I VOTE?

If you were a stockholder of record as of the Record Date, you may vote in person by attending the Special Meeting or you may vote by completing the enclosed proxy card and returning it signed and dated in the enclosed postage-paid envelope, or by following the procedures on the proxy card to vote your shares electronically.  If you hold your shares through a broker, bank or other nominee, you are considered to hold your shares in “street name,” and you will receive separate instructions from the nominee describing how to vote your shares.  Please note that if you hold your shares in street name and wish to vote those shares in person at the Special Meeting, you will need to obtain a legal proxy“legal proxy” from the broker, bank or other nominee that holds those shares for you.



Must I VOTE BY proxy or may I vote in person at the SPECIALannual meeting? 

You may vote in person at the Special Meeting ifIf you are a stockholder of record, you may attend and you providevote in person at the Special Meeting the identification required for admission.Meeting.  To be admitted at the Special Meeting, you may need to present personal photo identification.  If your shares are held in street name (i.e.(i.e., the shares are not registered in your name), you must (1) bringpresent personal photo identification and proof of stock ownership to the Special Meeting to be admitted and (2) obtain and bring with you to the Special Meeting a proxy from your broker, bank or other institution in whose name your shares are held in order to vote those shares at the Special Meeting.  A copy of your account statement or a letter from your broker, bank or other institution reflecting the number of shares of common stock you owned as of the Record Date (July 25, 2014)(April 17, 2017), will constitute adequate proof of stock ownership.ownership for admission to the Meeting.  In order to vote your shares held in street name at the Meeting, you also will need to obtain and bring with you to the Meeting a legal proxy from your broker, bank or other institution in whose name your shares are held. 



HOW WILL MY SHARES BE VOTED?

Shares of Company common stock which are represented by properly executed proxy cards that are received prior to the Special Meeting, and not subsequently revoked, will be voted by your proxies in accordance with your instructions by your proxies.instructions.  If you submit a valid proxy card prior to the Special Meeting but do not provide voting instructions, your proxies will vote your shares as recommended by the Board of Directors, except in the case of broker non-votes where applicable, as follows:

If any other matters are properly presented for voting at the Special Meeting, the persons appointed as proxies will vote on those matters, to the extent permitted by applicable law, in accordance with their best judgment.  No appraisal or dissenters’ rights exist for any action proposed to be taken at the Special Meeting.

The rules of The NASDAQ Stock Market LLC (“NASDAQ”), the stock exchange on which the Company’s common stock is listed, determine whether proposals presented at stockholder meetings are routine or non-routine.  If a proposal is routine, a broker holding common shares for a beneficial owner in street name may vote on the proposal without receiving instructions from the beneficial owner.  If a proposal is non-routine, the broker may vote on the proposal only if the beneficial owner has provided voting instructions.  A broker non-vote occurs when the broker is unable to vote on a proposal because the proposal is non-routine and the beneficial owner does not provide appropriate voting instructions.

The ratification of the appointment of the Company’s independent registered public accounting firm (Proposal 3) is the only routine matter.  Each of the other proposals is considered a non-routine matter and, therefore, your broker may vote on these matters only if you provide voting instructions.  Accordingly, it is important that you provide instructions to your broker on these matters.



CAN I REVOKE OR CHANGE MY VOTE AFTER I SUBMIT MY PROXY?

You may revoke your proxy at any time before the vote is taken at the Special Meeting.  To revoke your proxy, you must either advise the Corporate Secretary of the Company in writing before your shares have been voted at the Special Meeting, deliver to the Company another proxy that bears a later date, or attend the Special Meeting and vote your shares in person.  Attendance at the Special Meeting will not, by itself, revoke your proxy.  The last-dated proxy you submit (by any means) will supersede any previously submitted proxy. If you have instructed your broker, bank or nominee to vote your shares, you must follow directions received from your broker, bank or nominee to change your vote.

WHAT CONSTITUTES A QUORUM FOR THE MEETING?

A quorum exists if a majority of the outstanding shares of common stock entitled to vote (after subtracting any shares in excess of the 10% limit) at the Special Meeting is present in person or represented by proxy at the Special Meeting. The Special Meeting will be held if a quorum exists at the Special Meeting.  If you return valid proxy instructions or attend the Special Meeting in person, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting.  Broker non-votes also will be counted for purposes of determining a quorum.  If there are not sufficient shares present or represented by proxy at the Special Meeting to constitute a quorum or to approve or ratify any proposal at the time of the Special Meeting, the Special Meeting may be adjourned or postponed in order to permit the further solicitation of proxies.

WHAT VOTE IS REQUIRED?REQUIRED FOR EACH PROPOSAL?

The following describes the required vote on each proposal so long as a quorum is present at the Meeting.

•    Proposal 1 – Election of Directors

Under NASDAQ Marketplace Rule 5635,Delaware law and the Company’s Bylaws, Directors are elected by a plurality of the votes cast.  This means that the two (2) nominees receiving the greatest number of votes “FOR” election will be elected Directors.  Shares as to which the authority to vote is withheld and broker non-votes will be counted for quorum purposes but will not affect whether a nominee has received sufficient votes to be elected.  

•    Proposal 2 – Non-Binding Advisory Resolution to Approve the Compensation of the Company’s Named Executive Officers

Under the Company’s Bylaws, the affirmative vote of a majority of the votes cast is required for stockholder approval ofto approve the issuance of shares ofnon-binding advisory resolution to approve the compensation paid to the Company’s common stock issuable uponnamed executive officers as disclosed in this Proxy Statement.  The effect of an abstention is the conversion ofsame as a vote “AGAINST” the Series B Preferred Stock and the exercise of the related warrants to purchase common stock (“Warrants”).  Abstentions and brokerproposal.  Broker non-votes are not counted as votes cast and will not be counted in determining whether the proposal has been approved.



Certain directors and officers•   Proposal 3 – Ratification of the Appointment of the Company’s Independent Registered Public Accounting firm

Under the Company’s Bylaws, the affirmative vote of a majority of the votes cast is required to ratify the appointment of BKD LLP as the independent registered public accounting firm of the Company who collectively owned approximately 17%for the fiscal year ending December 31, 2017.  The effect of an abstention is the same as a vote “AGAINST” the proposal.

•    Proposal 4 – Amendment to our Certificate of Incorporation to Effect the Reverse Stock Split

Under Delaware law and the Company’s Certificate of Incorporation, as amended, the affirmative vote of the issued and outstandingholders of a majority of the shares of common stock of the Company which are outstanding and entitled to vote is required to approve the proposal to grant discretionary authority to the Company’s Board of Directors to amend our Certificate of Incorporation, as amended, to effect the Reverse Stock Split.  The effect of an abstention or broker non-vote is the same as a vote “AGAINST” the proposal.

•   Proposal 5 – Adjournment of the Record Date, have executed voting agreements pursuantMeeting

Under the Company’s Bylaws, the affirmative vote of a majority of the votes cast is required to which they have agreedapprove the proposal to adjourn the Meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the Meeting to approve Proposal 4.  The effect of an abstention is the same as a vote their shares“AGAINST” the proposal.  Broker non-votes will not be counted in favor of such proposal. determining whether the proposal has been approved.



WHO WILL COUNT THE VOTE?

The results of stockholder votingBroadridge, a servicing company for the financial industry, will tally the vote, which will be tabulated by Broadridge and certified by an Inspector of Election.  The Board of Directors has designated John W. Helmsdoerfer, Executive Vice President and Chief Financial Officer of the Company, to act as the Inspector of Election for the meeting.  Mr. Helmsdoerfer is an officer of the Company and an officer and employee of the Company’s wholly-owned operating subsidiary, CFBank a federally chartered savings association.National Association. 



IS THE BOARD OF DIRECTORS AWARE OF ANY OTHER MATTERS THAT WILL BE PRESENTED AT THE SPECIALANNUAL MEETING?

The CompanyCompany’s Board of Directors is not aware of any other matters to be presented at the Special Meeting.  If any matters not described in this Proxy Statement are properly presented at the Special Meeting, the persons named in the proxy card will use theirhis or her best judgment to determine how to vote your shares. This includes a motion to adjourn or postpone the Special Meeting in order to solicit additional proxies.



WHO PAYS THE COST OF PROXY SOLICITATION?

The Company will pay the costcosts of preparing, printing and mailing/delivering this proxy solicitation.statement, the accompanying proxy card, the Company’s 2016 Annual Report to Stockholders and other related materials and all other costs incurred in connection with the solicitation of proxies on behalf of the Company’s Board of Directors, other than the Internet access charges incurred by a stockholder when voting electronically.  The Company will also reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expensesout-of-pocket costs incurred by them in sending proxy materials to the beneficial owners of the Company’s common stock.

We have retained [____________],  a proxy solicitation firm, to assist us in soliciting proxies for the Meeting at an anticipated cost of $[] plus certain out-of-pocket expenses.  Directors, officers and regular employees of the Company may also solicit proxies personally or by telephone and will not receive additional compensation for these activities.

Delivery of Proxy Materials to Multiple Stockholders Sharing the Same Address

Unless we haveThe Company  periodically provides each registered holder of common stock at a shared address, not previously notified, with a separate notice of the Company’s intention to householder proxy materials.  Only one copy of this proxy statement, the notice of the Meeting and the Company’s 2016 Annual Report is being delivered to previously notified multiple registered holders of common stock who share an address, unless the Company has received contrary instructions we send a single copyfrom one or more of the registered holders of common stock.  A separate proxy statement, noticecard is being included for each account at the shared address. 

Registered holders of annual or special meetingcommon stock who share an address and annual report, if applicable, to any household at which two or more stockholders reside if we believe the stockholders are members of the same family.  Each stockholder in the household will continuewould like to receive a separate copy of the Company’s 2016 Annual Report, a separate notice of the Meeting and/or a separate proxy card. This process, knownstatement for the Meeting may contact the Company’s transfer agent, Computershare, by calling at 1-800-368-5948, or forwarding a written request addressed to Computershare, 250 Royall Street, Canton, MA  02021.  Promptly upon request, a separate copy of the Company’s 2016 Annual Report, a separate notice of the Meeting and/or a separate copy of this proxy statement, as “householding,” reducesapplicable, will be sent.  By contacting Computershare, registered holders of common stock sharing an address can also (i) notify the volume of duplicate information received at those households and helps reduce our expenses.

If you would likeCompany that the registered stockholders wish to receive your own set of theseparate annual reports to stockholders, proxy statement and noticestatements and/or notices of annual or special meetings for this year(or Notices of Internet Availability of Proxy Materials), as applicable, in the future, or (ii) request delivery of a single copy of annual reports to stockholders, proxy statements and/or notices of annual or special meetings (or Notices of Internet Availability of Proxy Materials), as applicable, in the future years, please follow the instructions described below: if they are receiving multiple copies.

If yourBeneficial holders of common shares are registered in your own name, pleaseshould contact our transfer agent, Registrar and Transfer Company, and inform them of your request to revoke householding by calling them at 1-800-368-5948 or writing to them at Registrar and Transfer Company, 10 Commerce Drive, Cranford, NJ 07016.  After receiving your revocation, we will promptly send individual documents to you.

If atheir bank, broker or other nominee holds your shares, please contact your bank, broker or other nominee directly.

If two or more stockholders residing infor specific information about the same household individually receive copies of the annual report, proxy statement and notice of annual or special meeting andhouseholding process as a household wishit applies to receive only one copy, you may contact our transfer agent at the address and telephone number listed above in the case of registered holders, or your bank, broker or other nominee directly if such bank, broker or other nominee holds your shares, and request that householding commence as soon as practicable.their accounts. 



WHO SHOULD I CALL IF I HAVE QUESTIONS?

If you have questions concerning this proxy solicitation, or the proposals to be considered at the Special Meeting, please call Thad Perry, President,John Helmsdoerfer, Chief Financial Officer, at (614) 334-7979.





Important Notice Regarding the Availability of Proxy Materials

for the SpecialAnnual Meeting to Be Held on September 8, 2014May 31, 2017:



The Company’s Proxy Statement for the SpecialAnnual Meeting, and the form of proxy card and the Company’s 2016 Annual Report to Stockholders are available at http://CFBankonline.com/secproxy.CFBankonline.com.  





CORPORATE GOVERNANCE

DIRECTOR INDEPENDENCE

The Board of Directors of the Company has determined that the following directors of the Company are “independent directors,” as that term is defined by applicable listing standards of the NASDAQ Marketplace Rules and by the Securities and Exchange Commission (the “SEC”):  Thomas P. Ash, Edward W. Cochran, James Frauenberg II, Robert E. Hoeweler and Robert H. Milbourne.  Timothy O’Dell does not qualify as an “independent director” of the Company as a result of serving as the President and Chief Executive Officer of the Company and CFBank during 2016, 

The NASDAQ independence definition includes a series of tests, such as that the director is not an employee of the Company and has not engaged in various types of business dealings with the Company.  As required by the NASDAQ Marketplace Rules, the Board of Directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of the Board, would interfere with the exercise of his independent judgment in carrying out the responsibilities of a director.  In making these determinations, the Board of Directors reviewed and discussed information provided by the directors and the Company with regard to each director’s business and personal activities as they may relate to the Company and its management, including those described under the heading “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS” on page 10 of this Proxy Statement.

BOARD LEADERSHIP STRUCTURE

The Company’s current Chairman, Robert E. Hoeweler, has served in this capacity since August 24, 2012.  Mr. Hoeweler has extensive experience in the banking industry and intimate familiarity with the operations of financial institutions. As a result, he is able to provide unique insights as Chairman that are valuable to the Board in determining and overseeing the strategic direction of the Company. 

Currently, the Board of Directors has placed the responsibilities of Chairman with an “independent” member of the Board, which we believe provides strong accountability between the Board and our management team.  Our Chairman is responsible for providing leadership to the Board of Directors and facilitating communication among the directors, setting the Board meeting agendas in consultation with the President and Chief Executive Officer, and presiding at Board meetings.  The Chairman also actively provides oversight to the activities and controls of the Company and CFBank. This delineation of duties allows the President and Chief Executive Officer to focus his attention on managing the day-to-day business of the Company and CFBank.  We believe this structure provides strong leadership for our Board while positioning our President and Chief Executive Officer as the leader of the Company in the eyes of our customers, employees, stockholders and other stakeholders.

The Board also believes that the Company and its stockholders are best served by a Board that has the flexibility to establish and change the Board’s leadership structure from time to time to fit the needs of the Company.  Pursuant to the Company’s Corporate Governance Guidelines, the Board of Directors has the power and authority to combine or separate the positions of Chairman and President and Chief Executive Officer.  Thus, from time to time, the Board may consider combining the roles of President and Chief Executive Officer and Chairman, and/or appointing a Lead Independent Director.  These decisions will be dependent upon the needs of the Company at that time, including the composition of the Board and the availability, willingness and qualifications of candidates to serve as Chairman and/or Lead Independent Director, as well as other factors.

BOARD ROLE IN RISK OVERSIGHT

The Board of Directors has overall responsibility for consideration and oversight of risks facing the Company and CFBank and is responsible for ensuring that material risks are identified and managed appropriately.  The Board delegates to its committees certain risk management oversight responsibilities related to their specific areas of responsibility.  The Audit Committee is responsible for overseeing financial risk exposure and the steps management is taking to monitor and control such exposures.  The Compensation Committee oversees the management of risks arising from our compensation programs, policies and practices for our executives and employees that would be reasonably likely to have a material adverse effect on the Company.   The Corporate Governance and Nominating Committee oversees risks related to corporate governance, including those related to performance and composition of the Board and the independence of Board members. 

Directors discuss risk and risk mitigation strategies with management within these committees.  All risk oversight discussions are included in committee and other reports to the full Board of Directors. 

BOARD MEETINGS AND COMMITTEES

The Board of Directors of the Company holds four (4) regular meetings annually and special meetings as called from time to time in accordance with the Bylaws of the Company.  During 2016, the Company’s Board of Directors held twelve (12) meetings. The Board of Directors of CFBank has the same composition as the Board of the Company and holds regular meetings monthly and special meetings as called from time to time in accordance with the Bylaws of CFBank.  During 2016, CFBank’s Board of Directors held twelve (12) meetings.  No director during the period he served attended less than 75% of the Company’ Board meetings and any committees on which he served.

The Board’s principal standing committees during 2016 were the Audit Committee, the Executive Committee, the Compensation and Management Development Committee, and the Corporate Governance and Nominating Committee.  Information regarding the functions of the Board’s committees, their present membership and the number of meetings held by each committee during fiscal 2016 is set forth below.  All committees operate under formal written charters adopted by the Board of Directors.

AUDIT COMMITTEE.  The Audit Committee provides assistance to the Board in fulfilling its oversight responsibility relating to the integrity of our consolidated financial statements and the financial reporting processes, the systems of internal accounting and financial controls, compliance with legal and regulatory requirements, the annual independent audit of our consolidated financial statements, the qualifications and independence of our independent registered public accounting firm, the performance of our internal audit function and of our independent registered public accounting firm, and any other areas of potential financial risk to the Company as specified by the Board.  The Audit Committee also is responsible for the appointment, retention and oversight of our independent registered public accounting firm, including pre-approval of all audit and non-audit services to be performed by the independent registered public accounting firm, and for the review and approval, on an ongoing basis, of all related-party transactions for potential conflict-of-interest situations.  The Audit Committee Report appears on page 33 of this Proxy Statement.

During 2016, the Audit Committee held twelve (12) meetings.  The following directors served as members of the Audit Committee during 2016:

Each director who currently serves on the Audit Committee qualifies, and each director who served as a member of the Audit Committee during 2016 qualified, as an “independent director” under Rule 5605(a)(2) of the NASDAQ Marketplace Rules and under SEC Rule 10A-3(b)(1).  None of such members of the Audit Committee has participated in the preparation of the financial statements of the Company or any of its current subsidiaries at any time during the past three years, and all of such members are able to read and understand fundamental financial statements, including our balance sheet, income statement and cash flow statement. The Board has also determined that Thomas P. Ash, the Chair of the Audit Committee, qualifies as an “audit committee financial expert” for purposes of Item 407(d)(5) of SEC Regulation S-K.

EXECUTIVE COMMITTEE.  The Executive Committee is responsible for strategy formulation, the detailed development of the Company’s and CFBank’s Business and Capital Plan and for oversight of the detailed operations of the Company.   The Executive Committee is also the working committee of the Board responsible for various activities including: identification, analysis, scenario development and action planning regarding issues and opportunities impacting CFBank’s current operations and future success. The Executive Committee also signs off on all information releases to outside parties.  The Executive Committee is comprised of the Board Chairman, the President and Chief Executive Officer and one additional non-employee director.  Meetings of the Executive Committee are also attended by the Company’s Chief Financial Officer.  Executive Committee meetings are generally held on a monthly basis, or as matters arise requiring consideration by the Executive Committee, and its activities are discussed with the full Board at Board meetings.

COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE.  The Compensation and Management Development Committee (the “Compensation Committee”) has overall responsibility for reviewing, evaluating and approving the director, officer and employee compensation plans, policies and programs of the Company and CFBank.  The Compensation Committee is responsible for administering our equity compensation plans and for establishing, in consultation with executive management, the Company’s general compensation philosophy and overseeing the development and implementation of executive compensation programs.    

During 2016, the Compensation Committee held five (5) meetings.  All members of the Compensation Committee are independent as defined under the NASDAQ Marketplace Rules.  The following directors served as members of the Compensation Committee during 2016:

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE.    The Corporate Governance and Nominating Committee is responsible for identifying qualified candidates for election, nomination or appointment to the Board and recommending to the Board of Directors the director nominees for election or appointment to the Board.  The Corporate Governance and Nominating Committee considers nominees in the context of standards codified in its Charter and in the Board’s Corporate Governance Guidelines.  The Committee also provides oversight on matters involving the size, composition and operation of the Board, including in the areas of committee membership and committee chairpersons.  The Committee also leads the Board in its annual review of the Board’s performance.  The Corporate Governance and Nominating Committee is authorized to employ professional search firms to assist in identifying potential members of the Board of Directors with the desired skills and disciplines.  No such firms were engaged or otherwise utilized during 2016. Final approval of director nominees is determined by the full Board of Directors, based on the recommendation of the Corporate Governance and Nominating Committee. 

During 2016, the Corporate Governance and Nominating Committee held one (1) meeting.  The following directors served as members of the Corporate Governance and Nominating Committee during 2016:

All members of the Corporate Governance and Nominating Committee during 2016 qualified as independent under the NASDAQ Marketplace Rules. 

COMMITTEE CHARTERS.  The authority and responsibilities of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee are set forth in their charters, which are posted in the Investor Relations section of our website at http://CFBankonline.com.

NOMINATING PROCEDURE

The Corporate Governance and Nominating Committee recommends candidates, including incumbents, for election and appointment to the Board of Directors, subject to the provisions set forth in the Company’s Certificate of Incorporation and Bylaws. Nominations are based on the criteria the Committee deems appropriate and consistent with the standards set forth in the Board’s Corporate Governance Guidelines.  Criteria considered by the Board may include the following: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable obligations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to the Company’s communities and shared values, as well as overall

experience in the context of the needs of the Board as a whole.  Nominations received from stockholders are considered and evaluated using the same criteria as all other nominations.

Nominations, other than those made by the Board of Directors after its review of the recommendations of the Corporate Governance and Nominating Committee, must be made by timely notice in writing to the Corporate Secretary as set forth in Article I, Section 6(c) of the Company’s Bylaws.  In general, to be timely, a stockholder’s notice must be received by the Company not less than ninety (90) days before the date of the scheduled annual meeting; however, if less than one hundred (100) days’ notice or prior disclosure of the date of the scheduled annual meeting is given by the Company, the stockholder has until the close of business on the tenth (10th) day following the day on which notice or prior disclosure of the date of the scheduled annual meeting was made.  The stockholder’s notice must include all the information set forth in Article I, Section 6(c) of the Company’s Bylaws, which includes the following:

The description above is a summary of the Company’s nominating process.  Any stockholder wishing to propose a director candidate to the Company must comply in full with the applicable procedures and requirements set forth in the Company’s Bylaws, the SEC’s proxy rules and Delaware law. 

QUALIFICATIONS OF DIRECTORS

The Board of Directors has codified certain standards for directors in the Board’s Corporate Governance Guidelines.  These guidelines provide that the Board of Directors should encompass, among other things, a diverse range of viewpoints, backgrounds, experiences and demographics sufficient to build a Board that is effective, collegial and responsive to the Company’s operations and interests.  The Corporate Governance Guidelines also provide that Board membership should be based on judgment, character, expertise, skills and knowledge useful to the oversight of the Company’s business as well as on business or other relevant experience.  Further, at all times a majority of the Board must be “independent directors,” as defined from time to time by the listing requirements of NASDAQ and any specific requirements established by the Board.  Each director also is expected to:

The Corporate Governance Guidelines are posted in the Investor Relations section of our website at http://CFBankonline.com.

CODE OF ETHICS AND BUSINESS CONDUCT    

The Board of Directors has adopted a Code of Ethics and Business Conduct, which applies to all of our directors, officers and employees, including directors, officers and employees of our subsidiaries and other affiliates.  Our Code of Ethics and Business Conduct is posted in the Investor Relations section of our website at http://CFBankonline.com.

BOARD MEMBER ATTENDANCE AT ANNUAL STOCKHOLDER MEETINGS

Although the Company does not have a formal policy regarding director attendance at annual stockholder meetings, directors are expected to attend these meetings absent extenuating circumstances.  All of our directors attended last year’s annual meeting of stockholders.

COMMUNICATIONS WITH DIRECTORS

The Board of Directors has adopted a process by which stockholders and other interested parties may communicate with the Board, any individual director or any committee chair by e-mail or regular mail.  Communications by e-mail should be sent to bobhoeweler@CFBankmail.com.  Communications by regular mail should be sent to the attention of the Board of Directors; any individual director by name; Chair, Audit Committee; Chair, Compensation and Management Development Committee; or Chair, Corporate Governance and Nominating Committee, c/o Corporate Secretary, Central Federal Corporation, 7000 N. High Street, Worthington, Ohio 43085.  Management will pass on all communications received to the appropriate director or directors without any screening.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

CFBank policy and Federal regulations related to insured financial institutions require that any and all loans or extensions of credit made by CFBank to related persons of the Company or CFBank, including executive officers, directors or their immediate family members, must (i) be made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to CFBank, (ii) not involve more than the normal risk of collectability and (iii) not present any other unfavorable features.  In addition, loans made to a director or executive officer may not exceed an amount which, when aggregated with the amount of all other loans to such person and his or her related interests, is equal to 15 percent of CFBank’s unimpaired capital and unimpaired surplus in the case of loans not fully secured, and an additional 10 percent of CFBank’s unimpaired capital and unimpaired surplus with respect to loans that are fully secured. All loans outstanding to such related persons totaled $2,399,398 at December 31, 2016, and were performing in accordance with their terms at that date.

On an annual basis, each director and each executive officer of the Company must complete a Directors’ and Officers’ questionnaire which requires disclosure of any transaction, arrangement or relationship with the Company and/or any of our subsidiaries since the beginning of the last fiscal year in which the director or executive officer, or any member of his or her immediate family, has or had a direct or indirect interest. As a part of its review process, CFBank compares information to track originations of any new loans for a director or an executive officer, or any member of his or her immediate family, and reconciles all then-current account information to ensure the data has been gathered and recorded accurately.

The Audit Committee is responsible for reviewing and overseeing policies designed to identify related person transactions that are material to the Company’s consolidated financial statements or otherwise require disclosure under applicable rules adopted by the SEC, including those transactions required to be disclosed under Item 404 of SEC Regulation S-K, or the rules of any other appropriate regulatory agency or body.  All such transactions must be approved in advance by the Audit Committee. In addition, under the terms of the Company’s Code of Business Conduct and Ethics, the Audit Committee is responsible for reviewing and overseeing all actions and transactions which involve the personal interest of a director or executive officer of the Company and determining in advance whether any such action or transaction represents a potential conflict of interest. Further, under the terms of CFBank’s Insider and Affiliate Credit and Regulation O Policy, all loans made to directors or executive officers of the Company or one of our subsidiaries must be reported to the Senior Credit Officer and the Compliance Officer. All such related party loans must conform to the Company’s credit policy. To the extent any transaction represents an ongoing business relationship with the Company or any of our subsidiaries, such transaction must be reviewed annually and be on terms no more favorable than those which would be usual and customary in similar transactions between unrelated persons dealing at arm’s length.





PROPOSAL NO. 1 –

ELECTION OF DIRECTORS



APPROVAL OF ISSUANCE OF SHARES OF COMMON STOCK

BACKGROUND

Commencing in April 2014, the Company conducted a private placement of up to 480,000 shares of its 6.25% Non-Cumulative Convertible Perpetual Preferred Stock, Series B (“Series B Preferred Stock”) for an offering price of $25.00 per share (the “Private Placement”).  Pursuant to the Private Placement, the Company sold 270,000 shares of Series B Preferred Stock on May 12, 2014 for an aggregate offering price of $6,750,000.  The Series B Preferred Stock was sold by the CompanyIn accordance with the assistance of McDonald Partners, LLC, as placement agent, on a best efforts basis.   After payment of approximately $272,250 in placement fees to McDonald Partners, LLC and approximately $75,000 of other offering expenses, the Company’s net proceeds from its sale of the 270,000 shares of Series B Preferred Stock were approximately $6,402,750.  

For each share of Series B Preferred Stock sold in the Private Placement, the Company also agreed to issue, at no additional charge, a Warrant to purchase (i) 2.00 shares of common stockBylaws of the Company, if the purchaser purchased less than $700,000 (28,000 shares)number of Series B Preferred Stock indirectors is currently fixed at six (6).  There are currently six (6) directors serving on the Private Placement, orBoard.  The independent members of the Board have nominated the two (2) 3.25 sharesdirectors named below for re-election as directors of common stock if the purchaser purchased $700,000 (28,000 shares) or more of Series B Preferred Stock in the Private Placement.  Warrants to purchase an aggregate of 610,000 shares of common stock were issued by the Company to the purchasers of the 270,000 shares of Series B Preferred Stock sold on May 12, 2014.  Subject to certain limitations described below under “DESCRIPTION OF THE WARRANTS,” the Warrants are exercisable for a period of approximately five (5) yearsserve three-year terms expiring on July 15, 2019, at a cash purchase price of $1.85 per share of common stock.

The offer and sale of the Series B Preferred Stock and Warrants were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or under the securities laws of any state in reliance upon exemptions from registration thereunder, including the exemptions provided under Section 4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.  The Series B Preferred Stock and Warrants were sold solely to “accredited investors” as defined in Rule 501(a) promulgated under the Securities Act.

Subject to the limitations described below, each share of the Series B Preferred Stock may be converted at any time, at the optionannual meeting in 2020.

Each nominee has expressed his willingness to serve as a director if elected.  Should a nominee decline or be unable to serve, or for good cause will not serve, the Board of Directors reserves the holder, into approximately 14.29 shares of the Company’s common stock, subjectright in its discretion to anti-dilution adjustments set forth in the Certificate of Designations filed with the Secretary of State of Delaware on May 7, 2014 (the “Certificate of Designations”).  The Certificate of Designations is attached heretosubstitute another person as Appendix A and is incorporated herein by reference.  The conversion ratio was calculated using a conversion price of $1.75, which was approximately 19.9% over the $1.46 closing price for the Company’s common stock on May 9, 2014 (the trading day immediately preceding the issuance of the Series B Preferred Stock).  The initial conversion price of $1.75 will adjust for stock dividends, stock splits and other corporate actions.

In addition, onnominee or after the third anniversary of the date on which shares of Series B Preferred Stock were first issued (i.e., May 12, 2014), if the stockholders of the Company have previously approved the issuance of the shares of the common stock upon the conversion of the Series B Preferred Stock and exercise of the Warrants, the Company may at its option and subject to certain limitations described below, cause all of the Series B Preferred Stock to be converted into shares of common stock of the Company at the then-applicable conversion ratio.

Unless and until the Company obtains the approval of its stockholders for the issuance of the shares of common stock upon the conversion of the Series B Preferred Stock and the exercise of the Warrants, the Series B Preferred Stock cannot be converted into, and the Warrants cannot be exercised for, more than 19.9% of the total outstanding common stock of the Company or more than 19.9% of the total voting power of the Company’s securities calculated as of immediately prior to the completion of the Private Placement.  No purchaser of Series B Preferred Stock in the Private Placement is permitted to convert (or exercise Warrants for) more than its pro rata amount of such total determined based upon such purchaser’s percentage ownership of the aggregate principal number of shares of

common stock issuable upon conversion of the Series B Preferred Stock and exercise of the Warrants.  This restriction has been imposed to comply with NASDAQ Marketplace Rule 5635, which requires that issuances of shares in a private placement of securities listed on NASDAQ must be approved by stockholders when the aggregate voting power of such securities would equal or exceed 20% ofreduce the number of nominees.  In this event, the proxy holders may vote your shares of common stock outstanding prior toin their discretion for any substitute nominee proposed by the transaction. 

REASONS FOR THE PRIVATE PLACEMENT

The Board of Directors unless you have withheld authority. 

The following sets forth information regarding each of the Company determined that the Private Placement was advisable and in the best interestsnominees for election as director of the Company and its stockholders.  The purposeeach of the Private Placement was to increasecurrent directors whose term will continue following the capital levelsmeeting.  Unless otherwise indicated, each individual has held his principal occupation for more than five years.  There are no family relationships among any of the directors and executive officers.

NOMINEES

Robert E. Hoeweler has been the Chairman of the Board of the Company and its wholly-owned subsidiary, CFBank since August 2012.  Since 1980 he has been the Chief Executive Officer of a diverse group of companies owned by the Hoeweler family, including manufacturing, communications, distribution, business services and to fund continued growth.  The Company intends to use approximately $293,000 of the net proceeds from the Private Placement to pay accrued interest, and bring all deferred interest payments current,venture capital entities.  He serves on the Company’s outstanding trust preferred securities.  The remainderboards of a major waste management company and a large commercial bakery.  He previously has served as the net proceeds from the Private Placement will be held byChairman of two family led businesses in financial services, a midsized community bank and a major payment processing service company.  He brings diverse business and banking skills and experience to the Company and infused into CFBank as needed to increase capital levels and/or to support growth.  Subject to obtaining any required approval from the Company’s bank regulators, net proceeds from the Private Placement may also be used in the future for other general corporate purposes, which may include, without limitation, the funding of acquisitions or other business combinations and/or the pay down or refinancing of debt.CFBank. Age 69.  Director since August 23, 2012.



REASONS FOR REQUESTING STOCKHOLDER APPROVAL

The Company’s common stockRobert H. Milbourne is listed onPresident of RHM Advisors, a business consulting firm specializing in financing, corporate development and business strategy for private sector and nonprofit organizations.  Mr. Milbourne was the NASDAQ Capital Marketfounding President and therefore, the Company is subject to the NASDAQ Marketplace Rules.  NASDAQ Marketplace Rule 5635(d) requires that an issuer obtain stockholder approval prior to the issuance of common stock in a non-public offering if such issuance would equal 20% or moreCEO of the issuer’s common stock or voting power outstanding beforeColumbus Partnership, a civic group of the issuance.  Becauseleading CEOs working to improve the economic and cultural future of Central Ohio (from 2002 to 2008).  He came to Columbus after serving as President of a similar group in Milwaukee for 17 years.  From 1977 to 1985, he was Vice President and Economist for the Kohler Company had a totalresponsible for strategic planning, real estate development and government affairs.  His career started in Wisconsin state government where is served as state budget director.  Mr. Milbourne has served on many corporate and nonprofit boards, including AirNet Systems (public company), Skybus Airlines, Care Network, PercuVision, Columbus Chamber, University of 15,823,710 shares of common stock outstanding priorWisconsin Athletic Board, Columbus School for Girls and CEOs for Cities (Chairman).  He brings extensive business and government experience and relationships that are valuable to the Private Placement, the Company is restricted by NASDAQ Marketplace Rule 5635 from issuing 3,164,742 or more shares of common stock, or securities convertible into or exercisable for such shares of common stock, in a non-public offering without obtaining stockholder approval.  The Company issued an aggregate of 270,000 shares of Series B Preferred Stock, which are convertible into 3,857,143 shares of common stock of the Company and Warrants to purchase an aggregate of 610,000 shares of common stock of the Company, in the Private Placement.  Because the 4,467,143 aggregate shares of common stock of the Company issuable upon the conversion of the Series B Preferred Stock and the exercise of the Warrants would exceed 20% of the Company’s common stock outstanding, the convertibility of the Series B Preferred Stock and the exercisability of the Warrants is limited until such time as stockholder approval is obtained. CFBank.  Age 70.  Director since May 2013.



The Company agreed to call and hold this Special MeetingCONTINUING DIRECTORS

Thomas P. Ash has been Director of stockholders, within 120 days following the first sale of Series B Preferred Stock on May 12, 2014, to present a proposal to approve the issuance of the shares of common stock upon the conversion of the Series B Preferred Stock and exercise of the Warrants in accordance with the requirements of NASDAQ Marketplace Rule 5635.  If the required stockholder approval is not obtainedGovernmental Relations at the Special Meeting,Columbus, Ohio-based Buckeye Association of School Administrators since August 2005.  Prior to that time, Mr. Ash was Superintendent of Schools, Mid-Ohio Educational Service Center in Mansfield, Ohio from January 2000 through July 2005.   Mr. Ash was the Company has agreedSuperintendent of Schools, East Liverpool City School District in East Liverpool, Ohio from August 1984 to callDecember 1999.  As Superintendent at Mid-Ohio Educational Service Center and hold additional meetings no less than every six months until the required stockholder approval is obtained. 

VOTING AGREEMENTS

Certain directorsEast Liverpool City School District, his experience included financial reporting and officers of the Company, who collectively owned approximately 17% of the issuedanalysis, supervising and outstanding shares of common stock of the Company as of the Record Date, have executed voting agreements pursuant to which they have agreed to vote their shares in favor of Proposal No. 1.

POSSIBLE EFFECTS IF PROPOSAL NO. 1 IS APPROVED

If Proposal No. 1 is approved by stockholders, the 270,000 shares Series B Preferred Stock may be converted into an aggregate of 3,857,143  shares of our Series B Preferred Stock baseddirecting financial staff members, implementing and complying with U.S. generally accepted accounting principles (GAAP) reporting requirements, and developing internal controls.  Mr. Ash’s public-sector and advocacy experience, both on the initial common stock conversion price of $1.75,local level in Columbiana County and on the Warrants may be exercised for an aggregate of 610,000 shares of our Series B Preferred Stock at an exercise price of $1.85 per share of common stock.  If stockholder approval is received, the rights and privileges associated with the common stock issuable upon conversion of the Series B Preferred Stock and exercise of the Warrants will be identicalstate level, lends a perspective unique to the rights and privileges associated with the common stock held by the Company’s existing common stockholders.  ApprovalBoard of Proposal No. 1 will also have the following consequences:Directors.  Age 67.  Term expires in 2019.  Director since 1985.



POSSIBLE EFFECTS IF PROPOSAL NO. 1 IS NOT APPROVED

If Proposal No. 1 is not approved by stockholders, the Series B Preferred Stock cannot be converted into, and the Warrants cannot be exercised for, more than 19.9% of the total outstanding common stock of the Company or more than 19.9% of the total voting power of the Company’s securities calculated as of immediately prior to the completion of the Private Placement.  No purchaser of Series B Preferred Stock would be permitted to convert (or exercise Warrants for) more than its pro rata amount of such total determined based upon such purchaser’s percentage ownership of the aggregate principal number of shares of common stock issuable upon conversion of the Series B Preferred Stock and exercise of the Warrants.   Additionally, if Proposal No. 1 is not approved by the Company’s stockholders, the Company will not have the right to convert the Series B Preferred Stock under the Series B Preferred Stock’s mandatory conversion feature.  

So long as the Series B Preferred Stock remains outstanding, the following will apply:

If the required stockholder approval is not obtained at the Special Meeting, the Company has agreed to call and hold additional meetings no less than every six months until the required stockholder approval is obtained.  The Company would be required to bear the costs of preparing, printing and mailing proxy materials in connection with each such subsequent meeting.

DESCRIPTION OF THE SERIES B PREFERRED STOCKJames H. Frauenberg, II has been theprincipal owner of Addison Holdings, LLC since 2007. He was active in opening/owning new franchises for multiple retail chains including Five Guys Burgers and Fries and Flip Flop Shops.  He was the Senior Vice President with Checksmart Financial in Dublin, Ohio from 1995 to 2008.  Mr. Frauenberg’s strong financial and entrepreneurial skills bring a high level of insight and judgment to the Company and CFBank.  Age 41.  Term expires in 2019.  Director since August 23, 2012.



This section summarizes specific terms and provisions of the Series B Preferred Stock. The description of the Series B Preferred Stock contained in this section is qualified in its entirety by the actual terms of the Series B Preferred Stock as set forthEdward W. Cochranhas been engaged in the Certificatepractice of Designations attachedlaw for 42 years since graduating from Columbia University Law School in 1975.  He holds an undergraduate degree from Harvard University, where he was a Harvard National Scholar.  Mr. Cochran is admitted to practice before the United States Supreme Court, as well as the courts of Ohio, the U.S. District Court for the Northern District of Ohio, and the United States Circuit Courts of Appeal for the Second, Third, Sixth, Seventh and Ninth Circuits.  In addition, Mr. Cochran is involved in various business interests and is a successful investor.  Mr. Cochran has strong relationships in Cleveland and brings a valuable legal perspective and regulatory understanding to the Company and CFBank. Appendix A to this Proxy Statement.Age 67.   Term Expires in 2018.  Director since December 19, 2012.



GeneralTimothy T. O’Dell has been the CEO and a Director of CFBank and the Company since August 2012.  Prior to joining CFBank in 2012, Mr. O’Dell owned and operated a consulting company specializing in providing advisory services to a number of privately held enterprises in construction, health care, real estate and professional services.  Mr. O’Dell previously spent 22 years at Fifth Third Bank, and was a senior executive with Fifth Third’s Central Ohio affiliate for 12 of those years, concluding his tenure serving as President and Chief Executive Officer of the Central Ohio affiliate. At Fifth Third’s Central Ohio affiliate, Mr. O’Dell also served as Executive Vice President and senior lender and managed its commercial banking, residential, and commercial real estate divisions. Prior to that he managed the Asset Based Lending Division for Fifth Third Bank engaged in financing growth companies and acquisition financing.  During his tenure, Fifth Third’s Central Ohio affiliate grew by $4 billion in deposits and $5 billion in loans from organic growth and through strategic acquisitions.  Mr. O’Dell has served on the board of the Columbus Chamber of Commerce and The Ohio State University Medical Center, and he was a founding investor in the Ohio TechAngel Venture Fund.  Mr. O'Dell holds a B.B.A. from Marshall University. Age 63.  Term expires in 2018.  Director since August 23, 2012.

The Series B Preferred Stock constitutes a single series of our preferred stock, consisting of 480,000 shares, $0.01 par value per share, having a liquidation preference amount of $25.00 per share.  The Series B Preferred Stock has no stated maturity

Recommendation and is not subject to any sinking fund or other obligationVote

Under Delaware law and the Company’s Bylaws, the two (2) nominees for election as directors of the Company to redeem or repurchasewho receive the Series B Preferred Stock. 

Ranking

The Series B Preferred Stockgreatest number of votes “FOR” election will rank, with respectbe elected directors.  Shares represented by properly executed proxy cards that are received prior to the payment of dividendsMeeting and distributions uponnot subsequently revoked will be voted “FOR” the liquidation, dissolution or winding upelection of the Company, seniornominees listed above unless authority to our common stock and each other classvote for one or series of capital stock wemore nominees is withheld.  Stockholders may issue inwithhold authority to vote for the futureentire slate as nominated or may withhold the terms of which do not expressly provide that it ranks on a parity with or seniorauthority to the Series B Preferred Stockvote for an individual nominee.  Shares as to dividend rightswhich the authority to vote is withheld and rights uponbroker non-votes will be counted for quorum purposes but will not be counted toward the liquidation, dissolutionelection of directors, or winding uptoward the election of the Company.  The Series B Preferred Stock will rank junior to existing and future debt obligations of the Company and junior to each class or series of capital stock we may issue in the future the terms of which expressly provide that it ranks senior to the Series B Preferred Stock.  The Series B Preferred Stock will rank on parity with each other class or series of capital stock we may issue in the future the terms of which expressly provide that it ranks on a parity with the Series B Preferred Stock.

Dividend Rights

Dividendsindividual nominees specified on the Series B Preferred Stock will be payable quarterly in arrears, if, when and as declared by ourproxy card.

The Board of Directors outrecommends that you vote “FOR” the re-election of legally available funds at an annual rate of 6.25% on the liquidation preference of $25.00 per share.  This is equivalent to $1.5625 per share of Series B Preferred Stock per annum.  Dividends on the Series B Preferred Stock will be non-cumulative.  If for any reason our Board of Directors does not declare cash dividends on the Series B Preferred Stock for a quarterly dividend period, we will have no obligation to pay any dividends for that period, whether or not our Board of Directors declares dividends on the Series B Preferred Stock for any subsequent dividend period.  In the event that the Board of Directors declares a partial dividend for any quarterly dividend period, such partial dividend will be distributed to the holderseach of the Series B Preferred Stock on a pro rata basis.

If, when and as declared by our Board of Directors, dividends will be paid on a quarterly basis, in arrears, beginning on July 15, 2014.  Each period from and including a dividend payment date (or the date of the issuance of the Series B Preferred Stock) to but excluding the following dividend payment date is referred to as a dividend period. Dividends payable for each dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months. If a scheduled dividend payment date falls on a day that is not a business day, the dividend will be paid on the next business day as if it were paid on the scheduled dividend payment date, and no interest or other amount will accrue on the dividend so payable for the period from and after that dividend payment date to the date the dividend is paid.

So long as the Series B Preferred Stock remains outstanding, the Company will be prohibited from paying dividends on (other than dividends payable solely in shares), or repurchasing or redeeming (other than pursuant to an employee benefit plan or arrangement or under certain other limited circumstances), other securities that rank junior to the Series B Preferred Stock unless full dividends on the Series B Preferred Stock for the then-current dividend period have been paid or set aside for payment. Currently, the only class of securities that ranks junior to the Series B Preferred Stock is the common stock.

Liquidation Preferencenominees listed above.

In the event

2016 COMPENSATION OF DIRECTORS

Members of our liquidation, dissolution or winding up, holders of the Series B Preferred Stock will be entitled to receive, out of our assets available for distribution to stockholders, before any distribution of assets is made to the holders of our common stock or any securities that rank junior with respect to distributions (but subject to the prior rights of holders of any senior stock), an amount equal to $25.00 per share, plus dividends declared and unpaid, if any, for any prior dividend periods (if we have received the prior approval of the FRB), but without accumulation of any undeclared dividends.  The amount that holders of the Series B Preferred Stock will be entitled to receive in the event of our liquidation, dissolution or winding up is subject to adjustment whenever there is a share split, combination, reclassification or other similar event involving the Series B Preferred Stock, as determined by the Board of Directors.

If, upon any voluntaryDirectors who are not also officers or involuntary liquidation, dissolution or winding up of the Company, the amounts payable related to the Series B Preferred Stock and any parity stock shall be insufficient to pay in full the amount to which such holders are entitled, the holders of the Series B Preferred Stock and parity stock will share ratably in any distribution of assets in proportion to the full respective distributable amounts to which they are entitled.  After payment of the full amount of the liquidating distribution to which they are entitled, the holders of the Series B Preferred Stock will not be entitled to any further participation in any distribution of our assets.  All distributions made with respect to the Series B Preferred Stock in connection with any liquidation, dissolution or winding up will be made pro rata to the holders of Series B Preferred Stock.

Neither the sale, lease, exchange or conveyance for cash, shares of stock, other securities or other consideration of all or substantially all of the assets or business of the Company (other than in connection with the voluntary or involuntary liquidation, dissolution or winding up of the Company) nor the merger, consolidation or share exchange of the Company into or with any other person will be deemed to be a liquidation, dissolution or winding up of the Company for purposes of the liquidation rights of the Series B Preferred Stock.

No Redemptions

The Series B Preferred Stock is not redeemable by the Company.

Conversion Rights

Optional Conversion.Subject to the limitations set forth below, each share of the Series B Preferred Stock may be converted at any time, at the option of the holder, into approximately 14.29 shares of our Common Stock. The conversion ratio was calculated using a conversion price of $1.75 per share of common stock. However, until the Company obtains the approval of its stockholders for the issuance of the shares of common stock upon the conversion of the Series B Preferred Stock and/or the exercise of the Warrants, the Series B Preferred Stock cannot be converted into, and the Warrants cannot be exercised for, more than 19.9% of the total outstanding common stockemployees of the Company or more than 19.9%CFBank (“non-employee directors”) receive certain fees for their service on the Boards of the total voting powerDirectors of the Company’s securitiesCompany and CFBank.  For 2016 (and currently), each non-employee member of the Board of Directors receives an annual retainer, payable quarterly, in the amount of $30,000, except that (1) the amount of annual retainer payable to each of the Chairs of the Audit Committee and of the Compensation Committee is $36,000, and (2) the annual retainer payable to the Chairman of the Board of Directors is $48,000 (effective as of immediately priorApril 1, 2016). Prior to April 1, 2016, Mr. Hoeweler received an increased annual retainer, in the Private Placement.  No purchaseramount of $100,000 per year, for his service as Chairman of the Series B Preferred StockBoard in recognition of the Private Placement will be permittedsignificant additional time and effort expended by Mr. Hoeweler as a non-employee director in connection with his duties as Chairman and as a member of the Executive Committee, including in connection with capital and regulatory projects and matters.  Effective as of January 1, 2016, each non-employee director serving as a member of the Executive Committee of the Board of Directors also received a fee of $1,000 for attendance at each meeting of the Executive Committee, provided that Mr. Hoeweler was entitled to convert (or exercise Warrants for) more than such purchaser’s pro ratareceive this fee effective April 1, 2016.

Members of the Board of Directors are also eligible to receive restricted stock, stock options and other equity awards under the Company’s 2009 Equity Compensation Plan.  Effective as of December 21, 2016, each of the directors of the Company were granted 16,000 shares of restricted stock, except that (1) the amount of such total determined based upon such purchaser’s percentagerestricted shares granted to each of the Chairs of the Audit Committee and of the Compensation Committee were 18,000, and (2) Mr. Hoeweler was granted 24,000 shares of restricted stock as Chairman of the Board of Directors, and (3) due to regulatory limitations related to Mr. Cochran’s existing ownership of Company common stock, the aggregate numberCompensation Committee and the Board elected to provide Mr. Cochran with a cash award in lieu of his restricted stock award.  The shares of commonrestricted stock issuable upon conversion ofwill vest ratably over a three-year period beginning on December 21, 2017.

The following table summarizes compensation paid to each director who is not a named executive officer during the Series B Preferred Stock and exercise of the Warrants. year-ended December 31, 2016.  

Subject to the limitation on conversion discussed above, holders of Series B Preferred Stock may exercise conversion rights by (i) surrendering the certificates representing the shares of Series B Preferred Stock to be converted to the Company’s conversion agent, (ii) submitting a properly completed letter of transmittal specifying the number of shares of Series B Preferred Stock that the holder wishes to convert and the names and addresses in which the shares of common stock are to be issued, and (iii) if required by the Company or applicable law, furnishing appropriate endorsements and transfer documents and paying applicable transfer or similar taxes.

Mandatory Conversion. Subject to the prior receipt of stockholder approval as described above, on or after the third anniversary of the date on which shares of Series B Preferred Stock are first issued, we may, at our option and subject to the limitations described below, cause all of the Series B Preferred Stock to be converted into shares of common stock at the then-applicable conversion ratio. We may exercise our conversion right if for 20 trading days within any period of 30 consecutive trading days, including the last trading day of such period, ending on the trading day preceding the date we give notice of mandatory conversion, the closing price of the common stock exceeds 135% of the then-applicable conversion price of the Series B Preferred Stock.    

EXECUTIVE OFFICERS

Provided below is information regarding each of the Company’s executive officers:

Mr. Helmsdoerfer has been the CFO of the Company and CFBank since March 2013.  As a CPA with over 30 years of financial experience, which includes Big Four public accounting and 25 years as a CFO, he has a diverse finance and operations background in addition to his financial services background.  Prior to joining CFBank, Mr. Helmsdoerfer spent 18 years with Fifth Third Bank where he held positions as both a CFO and Regional CFO for the Central Ohio affiliate and region.   He also served as CFO for Nationwide Bank and Wilmington Savings Bank during his career.   Mr. Helmsdoerfer holds a B.S.B.A degree from Miami University where he graduated cum laude. 

The initial conversion pricebiography for Mr. O’Dell is included in the section entitled “Proposal 1 – Election of $1.75 will adjustDirectors” above.

COMPENSATION OF EXECUTIVE OFFICERS

OVERVIEW OF COMPENSATION PROGRAMS

The Compensation Committee of the Board has overall responsibility for stock dividends, stock splitsreviewing, evaluating and approving the director, officer and employee compensation plans, policies and programs of the Company and CFBank.  The Compensation Committee is responsible for administering our equity compensation plans and for establishing, in consultation with executive management, the Company’s general compensation philosophy and overseeing the development and implementation of executive compensation programs.  The responsibilities of the Compensation Committee include, but are not limited to: evaluation and approving goals and objectives relevant to compensation of the President and Chief Executive Officer and other corporate actions affectingexecutives; evaluating the common stock.  If we exercise our conversion right, each shareperformance of Series B Preferred Stock subjectthose executive officers in light of those goals and objectives; and recommending to the mandatory conversion will be automatically converted into approximately 14.29 sharesBoard compensation policies for non-employee directors.

The compensation programs include a base salary as the primary source of common stock.compensation. However, other forms of compensation are utilized including: bonus incentive; stock options; restricted stock; retirement plans; health and life insurance benefits; and other perquisites including car, mobile phone and travel allowances.

On any mandatory conversion date,

The Compensation Committee regularly reviews the Company’s compensation programs to ensure that controls are in place to ensure that employees are not presented with the opportunity to take unnecessary or excessive risks that could threaten the value of the Company.   The Committee reviews and approves both the Company-wide and individual performance objectives that are used to determine how incentive payments are determined. The performance metrics are based on customary financial institution performance metrics as well as peer comparisons and trend analysis.

No compensation consultants were engaged by the Compensation Committee or the Board in 2016 or 2015.

COMPENSATION PHILOSOPHY AND OBJECTIVES

The Company’s compensation program is designed to provide market-relevant incentives and rewards to those leadership employees who are largely responsible for the success and growth of the Company will provide noticeand CFBank, and to assist the Company and CFBank in attracting executives and other key employees with experience and ability.  Our compensation objectives begin with the premise that our success depends on the dedication and commitment of the mandatory conversion dateemployees in key management positions, and the incentives we provide those employees to holderssuccessfully implement our business strategy and corporate goals. We base our compensation practices on meeting the demands of the Series B Preferred Stock alongemployment market, aligning the compensation of our employees with our stockholders’ interests, and driving superior performance.

Our compensation programs are designed to reward employees based upon their management responsibilities, performance levels, and their ability to create long-term value. Other considerations in the design of our compensation programs include: safe and sound operation of CFBank; management of business risk; experience levels to operate in a statementcomplex business environment; and the retention and development of incumbent executive management.  The Company’s compensation program includes an annual review and adjustment to base salary based on company-wide and individual performance objectives by which each employee’s contribution to the number of shares of common stock to be issued upon the conversion and, if certificates are to be issued, the place where certificates for the Series B Preferred Stock may be surrendered.Company’s success is measured. 

Fractional Shares.No fractional shares of common stock shall be issued upon conversion of the Series B Preferred Stock. Upon any conversion, all fractional share interests to which a holder may be entitled shall be aggregated into whole shares of common stock with cash being paid for any fractional interest that may remain after such aggregation.

The Company will pay cash forbelieves that its’ incentive compensation arrangements appropriately balance risk and financial results in a manner that does not expose the fractional shareCompany to imprudent risk taking.  As such, the Company’s incentive compensation arrangements take into account the risks, as well as the financial benefits, from the employee’s activities and the impact of those activities on the Company’s safety and soundness.  In addition to the compensation programs being balanced in design, the implementation is such that actual payments may vary based on risks or risk outcomes.  Appropriate personnel have input into the closing stock priceprocess to assess the effectiveness of the common stock on the trading date preceding conversion.

Adjustments to Conversion Ratio and Conversion Price. The conversion ratio and the conversion price will be proportionately adjusted from time to time for stock splits, stock dividends and other reclassifications of our common stock, as describedthese processes in the Certificate of Designations attached hereto as Appendix A.discouraging imprudent risk-taking.  In addition, the liquidation preferenceCompany monitors performance against key measurements and reserves the flexibility to revise the payments as needed if payments do not appropriately reflect risks.

COMPONENTS OF COMPENSATION

Our executive compensation program is designed to be simple, competitive and link pay to performance.  For 2016, the compensation paid to our executive officers consisted of the Series B Preferred Stock will be adjusted whenever there occurs a stock split, combination, reclassification or other similar event involving the Series B Preferred Stock, which will also result in a corresponding adjustment to the conversion ratio. following components:    

Voting Rights

The holders of the Series B Preferred Stock will not have voting rights, except as specifically required by Delaware law and as set forth in the Certificate of Designations attached hereto as Appendix A.  In any matter in which the Series B Preferred Stock may vote, each share of Series B Preferred Stock will represent one vote.

So long as any shares of Series B Preferred Stock remain outstanding, unless a greater percentage is required by law, the affirmative vote or consent of the holders of at least two-thirds of all of the shares of Series B Preferred Stock at the time outstanding, voting separately as a class, will be required to:

In August 2016, the Company adopted the Central Federal Corporation Incentive Compensation Plan (the “Incentive Compensation Plan”), pursuant to which the Compensation Committee is authorized to grant employees of the Company or CFBank the opportunity to earn awards of incentive compensation based on the achievement of performance objectives established by the Committee.  For 2016, the Compensation Committee and the Board of Directors approved the grant of awards to Timothy O’Dell and John Helmsdoerfer under the Incentive Compensation Plan.  For additional information regarding the Incentive Compensation Plan and the 2016 awards granted thereunder, see “— Incentive Compensation Plan Information” below.

On August 15, 2016, the Company and CFBank entered into an employment agreement with each of Timothy T. O’Dell, President and Chief Executive Officer of CFBank, and John W. Helmsdoerfer, Executive Vice President and Chief Financial Officer of CFBank.    See “— Employment Agreements” below for additional information.       

2016 COMPENSATION

In accordance with the rules established by the SEC, the Company is required to provide certain data and information in regard to the compensation and benefits provided to the Company’s President and Chief Executive Officer and certain of its other most highly compensated executive officers of the Company for the years ended December 31, 2016 and 2015.    During the year ended December 31, 2016, the Company had two executive officers – Timothy T. O’Dell, President and Chief Executive Officer, and John W. Helmsdoerfer, Executive Vice President and Chief Financial Officer – who are included in the Summary Compensation Table below.

EQUITY COMPENSATION PLAN INFORMATION

On May 21, 2009, the stockholders of the Company approved the Central Federal Corporation 2009 Equity Compensation Plan (the “2009 Plan”). The 2009 Plan was developed to provide incentives and rewards to those employees and directors who are largely responsible for the success and growth of the Company and its affiliates, and to assist the Company and CFBank in attracting and retaining directors, executive officers and other key employees with experience and ability.  The 2009 Plan provides for discretionary grants of stock options, stock appreciation rights and restricted stock.  The First Amendment to the 2009 Plan approved by stockholders at the May 13, 2013 annual meeting increased the number of shares of common stock reserved for awards thereunder from 200,000 to 1,500,000. Stock Options expire after ten years and vest over a three-year period; the price of the options are set based upon the fair market value of our common stock at the date of the grant.  Shares of restricted stock vest over a three-year period.

Awards during 2016 Fiscal Year

Effective as of December 21, 2016, Mr. O’Dell and Mr. Helmsdoerfer were granted 51,000 shares and 34,000 shares of restricted stock, respectively. The shares of restricted stock will vest ratably over a three-year period beginning on December 21, 2017.

Outstanding Equity Awards at Fiscal Year End

The following table shows information regarding equity awards outstanding to our named executive officers as of December 31, 2016.  All outstanding equity awards were granted under the 2009 Plan.

The following table sets forth information about Company common stock that may be issued upon exercise of options, warrants and rights under all of the Company’s equity compensation plans as of December 31, 2016.

Equity Compensation Plan Information

Incentive Compensation Plan INFORMATION

On August 11, 2016, the Company adopted the Incentive Compensation Plan to enable it to attract and retain skilled employees, increase organizational and employee performance, promote employee retention, and allow personnel costs to vary along with revenues, all while appropriately balancing risk and financial rewards.

Under the Incentive Compensation Plan, the Compensation Committee is authorized to select the employees of the Company or any of its wholly-owned subsidiaries who are eligible to participate.  Under the Incentive Compensation Plan, designated employees are given the opportunity to earn awards of incentive compensation if the Company or CFBank achieves various performance objectives established by the Compensation Committee.

Pursuant to the Incentive Compensation Plan, designated employee participants may earn incentive compensation based on the satisfaction of corporate and/or strategic performance criteria that must be satisfied over a prescribed performance period in order to receive payment.  For each performance period, the Committee shall establish: (a) performance objectives used to determine the amount payable to each participant; (b) the requisite level of achievement of the performance objectives (which may include threshold, target and maximum levels); (c) the method for determining the amount payable based on the achievement of the performance objectives; and (d) any other terms and conditions.

The performance criteria that the Committee may use to establish awards under the Incentive Compensation Plan include earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis); return on equity; return on assets; revenues; expenses or expense levels; one or more capital or operating ratios; stock price; stockholder return; market share; cash flow; capital expenditures; net borrowing, debt, leverage levels or debt ratings; strategic objectives (including, mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions); net asset value per share; growth in deposits or assets; asset or credit quality; economic value added; regulatory compliance; or such other measures as the Board may select from time to time.

In order to receive a payment of incentive compensation under the Incentive Compensation Plan, a participant must remain employed on the payment date.  However, if a participant’s employment is terminated prior to the payment date due to death, disability or retirement (as defined in the Incentive Compensation Plan), the participant may receive a prorated payment.

2016 Incentive Compensation Plan Awards

On August 11, 2016, the Compensation Committee and the Board of Directors approved the establishment of 2016 awards (the “2016 incentive awards”) under the Incentive Compensation Plan.  The 2016 incentive awards permitted the employees selected as participants to earn a specified “target” percentage of the incentive pool. The Compensation Committee

established an incentive pool and selected Timothy O’Dell and John Helmsdoerfer as participants for 2016 incentive awards.  The maximum incentive award that could be earned by each participant was an amount equal to 100% of such Participant’s base compensation.  The amount of the incentive that could be earned by each participant under the 2016 incentive awards was based on the level of achievement of the following performance objectives over a performance period of one year that began on January 1, 2016:

The 2016 incentive awards could be earned at different levels, depending on the level of attainment of the performance objectives.  The Compensation Committee established both “threshold” and “maximum” performance target objectives and weighted percentages for each of these performance objectives.  The potential incentive awards ranged from 0% if certain “threshold” targets were not achieved, to 90% if the “maximum” targets were achieved.  The Board also had discretion to grant participants a supplementary discretionary bonus not to exceed 10% of the participant’s share of the incentive pool as determined by the Board in its sole discretion.

For 2016, Messrs. O’Dell and Helmsdoerfer earned incentive bonuses in the amount of $232,500 and $116,250, respectively, pursuant to their 2016 incentive awards.  Based on the Company’s success in growing earnings, loans and deposits, improving credit quality, reducing criticized assets and achieving targeted regulatory performance goals, the maximum performance target objectives were achieved under the 2016 incentive awards for each of Messrs. O’Dell and Helmsdoerfer.  The 2016 incentive awards were paid in a single installment in  March 2017.

EMPLOYMENT AGREEMENTS

The Company and CFBank are parties to an employment agreement with each of Timothy T. O’Dell, President and Chief Executive Officer of CFBank, and John W. Helmsdoerfer, Executive Vice President and Chief Financial Officer of CFBank.  Each employment agreement was effective as of August 15, 2016, and has an initial term ending on December 31, 2018. Annually, beginning in 2017, the Boards of Directors of CFBank and the Company will review each employment agreement to determine whether extension of the employment agreement for an additional 12 months is appropriate.  Mr. O’Dell will receive an initial base annual salary of $240,000 and Mr. Helmsdoerfer will receive an initial base annual salary of $210,000.  In addition to the base annual salary, the employment agreements provide for, among other things, participation in incentive programs and other employee benefit plans and other fringe benefits applicable to executive employees.

The employment agreements provide for certain payments if the executive executes a release of claims against CFBank and the Company and either: (a) has an involuntary termination without “cause” not in connection with a “change of control”, (b) voluntarily terminates with “good reason” not in connection with a “change in control,” (c) has an involuntary termination without “cause” during the first 24 months after a “change of control”, (d) voluntarily terminates with “good reason” during the first 24 months after a “change in control,”(e) dies, or (f) becomes disabled.

In the event of involuntary termination without “cause” or voluntary termination with “good reason,” the terminated executive is entitled to receive a severance benefit equal to:

Except as otherwise required by law, we may, without

Upon the consent of any holder of Series B Preferred Stock, (i) increase the amount of authorized shares of Series B Preferred Stock or issue any additional shares of Series B Preferred Stock or (ii) authorize, increase the authorized amount of, or issue parity stock (provided that dividend rights are noncumulative) and junior stock, provided that any such parity stock or junior stock does not rank senior to the Series B Preferred Stock as to dividend rights or rights upon liquidation, dissolution or winding uptermination of the Company.

DESCRIPTION OF THE WARRANTS

General

Each purchaserexecutive without cause or the voluntary termination by the executive with good reason within 24 months after a “change of Series B Preferred Stock incontrol,” the Private Placement received, at no additional charge,executive will receive a Warrantlump sum payment equal to purchase (i) 2.00 sharesa multiple (2 for Mr. O’Dell and 1.5 for Mr. Helmsdoerfer) of commonthe sum of the terminated executive’s base salary on the date of termination and the average bonus paid to such executive over the 24 month period preceding such termination.  The lump sum shall be paid within sixty days following the executive’s termination date.  The terminated executive is also entitled to full vesting of all outstanding equity awards and stock if the purchaser purchases less than $700,000 (28,000 shares) of Series B Preferred Stock in the Private Placement or (ii) 3.25 shares of common stock if the purchaser purchased $700,000 (28,000 shares) or more of Series B Preferred Stock in the Private Placement.  Warrants to purchase a total of 610,000 shares of common stock were issued to purchasers in the Private Placement.

Term

The Warrants areoptions, which shall remain exercisable for athe full option exercise period that would have applied had the executive remained employed.  This change of approximately five (5) years expiring at 5:00 p.m., Eastern Time,control benefit shall be subject to reduction if necessary to comply with regulatory limitations on July 15, 2019.golden parachute payments or to avoid excise taxes under Internal Revenue Code Section 4999.

Exercise Price and Adjustments

The Warrants haveIf during the term an exercise price of $1.85 per share of common stock.  The number of shares of common stock for which Warrants may be exercised andexecutive terminates employment due to his death or disability, as defined under the exercise price applicableagreement, the executive is entitled to the Warrants will be proportionately adjusted in the event that the Company pays stock dividends or makes distributions of common stock, or subdivides, combines or reclassifies its outstanding common stock, such as in a stock split or reverse stock split.  The exercise price is payable only by cash or check. 

Fractional Shares

No fractional shares of common stock will be issued upon the exercise of the Warrants or as a consequence of any adjustment pursuant to the Warrants.  All shares of common stock, including fractions, issuable upon exercise of one or more Warrants will be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share of common stock.  If, after aggregation, the exercise would result in the issuance of a fractional share of common stock, the Company will, in lieu of issuance of such fractional share, pay to the holder cash inreceive an amount equal to such fraction multiplied by1 year of his base salary, payable in 12 equal monthly installments commencing on the closing pricefirst business day of the commonsecond month beginning after his date of termination.  Any death/disability benefit provided under the employment agreement will be offset by any death or disability benefit or payment provided by or on behalf of CFBank or Company, whether insured or self-insured.  All outstanding stock on the most recent trading day immediately preceding the exercise.

Voting Rights

Prior to exerciseoptions shall become vested as of the Warrants, the Warrants will not entitle the holders thereof to any voting rights or other rights as a shareholder of the Company, except that the holders of the Warrants will have the right to receive certain notices from the Company.

Reorganization, Consolidation or Merger

In the event of a reorganization of the Company, the consolidation or merger of the Company with or into another entity or the conveyance by the Company of all or substantially all of its assets to another entity (a “Business Combination”), then, and in each such case, the Company will mail a notice to holders of the Warrants at least 20 days prior to the record date for determining eligible holders entitled to receive the securities or property to be

distributed upon the consummation of such Business Combination. The notice will also provide in reasonable detail the terms and a description of the Business Combination and indicate the last date on which holders of the Warrants may exercise the Warrants in order to receive such securities or property.  As long as the required notice is provided to holders of the Warrants, any Warrants not exercised prior to the deadline for exercising the Warrants as set forth in the notice will be cancelled and become null and void on the effective date of the Business Combination. 

Registration Rights

The Company has agreedtermination due to provide holders of the Warrants with certain registration rights with respect to the shares of common stock issuedhis death or issuable upon exercise of the Warrants,disability, and shall remain exercisable in accordance with the terms of each applicable option award agreement.

The employment agreements also require each of the executives to comply with a Registration Rights Agreement.  Pursuantnon-solicitation covenant during his employment with CFBank and Company during the term of the employment agreements and for a period of 1 year thereafter (or, if longer, the number of months of severance payments under the employment agreement).

The employment agreements also provide for a clawback of any incentive paid to, credit to an account on behalf or, or vested to the Registration Rights Agreement,executive within the Company has agreedprior twenty-four (24) months under certain circumstances if it is later determined that the incentive is directly attributable to filematerially misleading financial statements or if applicable law or exchange listing regulation would require the minimum clawback necessary to comply with the SEC a shelf registration statement to register the resale of the shares of common stock issuable upon exercise of the Warrants (“Registrable Securities”) under the Securities Act, and to use its reasonable best efforts to cause such shelf registration statement to be declaredlaw or become effective and to keep such shelf registration statement continuously effective and usable for resale of such Registrable Securities until such time as no such Registrable Securities are remaining, or the earlier termination of the Registration Rights Agreement as described below.  The Company’s filing of  such shelf registration statement, however, will only be triggered if and when the closing price of the common stock exceeds the $1.85 exercise price of the Warrants (as adjusted pursuant to the Warrant) for at least 20 trading days within any period of 30 consecutive trading days.  The Company’s obligation to file a shelf registration statement under the terms of the Registration Rights Agreement is conditioned upon the Company’s eligibility to file a registration statement on Form S-3, as well as certain other limitations and conditions set forth in the Registration Rights Agreement.regulation.

Pursuant to the Registration Rights Agreement, the Company will also agree to provide certain “piggyback” registration rights to holders of the Warrants.  Subject to certain conditions described in the Registration Rights Agreement, if during any period when an effective shelf registration statement is not available, the Company proposes to register any of its equity securities, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company agrees to notify the holders of the Warrants of its intention to effect such a registration and will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 business days after the date of the Company’s notice.

The Company will pay all registration expenses incurred in connection with any registration, qualification or compliance with the Registration Rights Agreement, except that any sellers of Registrable Securities will be responsible for any applicable selling commissions, discounts and stock transfer taxes and certain other selling expenses described in the Registration Rights Agreement.

The Registration Rights Agreement, and the obligations of the Company thereunder, will terminate upon the earlier of January 15, 2020, or such time as there are no Registrable Securities remaining.



PRO FORMA DATA

PROPOSAL 2 –

NON-BINDING ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION



The unaudited pro forma consolidated balance sheets asDodd-Frank Wall Street Reform and Consumer Protection Act of March 31, 20142010 (the “Dodd-Frank Act”) and corresponding SEC rules enable the unaudited pro forma earnings per shareCompany’s stockholders to vote to approve, on an advisory and book value per share tables have been prepared by management to illustratenon-binding basis, the impact of (i) the issuancecompensation of the Series B Preferred Stock and WarrantsCompany’s named executive officers as disclosed in this Proxy Statement in accordance with SEC rules.  At the Company’s 2013 annual meeting, the Company’s stockholders voted to recommend holding an advisory vote for the approval of the compensation of the Company’s named executive officers every year.  Consistent with this recommendation, the Board of Directors is submitting the following resolution for stockholder approval at the Meeting:

“RESOLVED, that the stockholders of Central Federal Corporation (the “Company”) hereby approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Private PlacementCompany’s Proxy Statement for its 2017 Annual Meeting of Stockholders pursuant to Item 402 of SEC Regulation S-K, including the compensation tables, notes and (ii)narrative disclosures contained under the conversionheading “COMPENSATION OF EXECUTIVE OFFICERS” in the Company’s Proxy Statement.

The Board of allDirectors believes that the Company’s compensation policies and procedures, which are reviewed and approved by the Compensation Committee, are effective in aligning the compensation of the shares of Series B Preferred Stock and exercise of all of the Warrants.  Since neither the Series B Preferred Stock nor the Warrants had been issued at the time of the balance sheet presented, the data is only presented for illustrative purposes.

The following tables presentCompany’s named executive officers with the Company’s unaudited earnings per shareshort-term goals and long-term success and that such compensation and incentives are designed to attract, retain and motivate the Company’s key executives who are directly responsible for the three months ended March 31, 2014,Company’s continued success.  The Board of Directors believes that the Company’s compensation policies and as adjusted for (i)practices do not threaten the issuance of 270,000 shares of Series B Preferred Stock and Warrants to purchase 610,000 shares of common stockvalue of the Company inor the Private Placement and (ii) the conversion of all of the shares of Series B Preferred Stock and the exercise of all of the Warrants.

Pro forma earnings per share calculations in the top chart assume that the Series B Preferred Stock were issued on January 1, 2014, but neither the Series B Preferred Stock nor the Warrants were converted into shares of common stock; therefore, a dividend was paid on the Series B Preferred Stock.

The bottom chart represents the effects of the issuance and conversion of all the Series B Preferred Stock and the exercise of all Warrants into shares of common stock. This chart assumes that the Series B Preferred Shares and the Warrants were issued on January 1, 2014, and both the Series B Preferred Stock and the warrants were converted into common shares of Common Stock on the same day; therefore, no dividend was paid on the Series B Preferred Stock.

This analysis provides information on the effects of the preferred dividend payments on earnings available to common stockholders, and the effects of the conversion of all of the shares of Series B Preferred Stock and the exercise of all Warrants on earnings per share. Since the Series B Preferred Stock was not issued during this time period, it is being shown for illustrative purposes only.

INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS

Certaininvestments of the Company’s directorsstockholders or create incentives to engage in behaviors or business activities that are reasonably likely to have a material adverse impact on the Company.  The Board of Directors further believes that the Company’s compensation policies and procedures are reasonable in comparison both to the Company’s peer bank holding companies and to the Company’s performance during the past year.

Stockholders are encouraged to carefully review the information provided in this Proxy Statement regarding the compensation of the Company’s named executive officers together with their affiliates, purchased an aggregate of 52,200 shares of Series B Preferred Stock, and were issued Warrants to purchase an aggregate of 139,400 shares of common stock, in the Private Placement.  See “BENEFICIAL OWNERSHIPsection captioned “COMPENSATION OF STOCK”EXECUTIVE OFFICERS” beginning on page ___15 of this Proxy Statement.    The purchase price paid

Because your vote is advisory, the outcome of the vote will not: (i) be binding upon the Company’s Board of Directors or the Compensation Committee with respect to future executive compensation decisions, including those relating to the Company’s named executive officers, or otherwise; (ii) overrule any decision made by the Company’s directors and executive officers, together with their affiliates, was $25.00 per share,Board of Directors or the same price paidCompensation Committee; or (iii) create or imply any additional fiduciary duty by all other persons who purchased sharesthe Company’s Board of Series B Preferred Stock in this Private Placement.  As a result of their purchase of Series B Preferred Stock and Warrants inDirectors or the Private Placement, these directors and executive officers have an interest inCompensation Committee.  However, the Compensation Committee expects to take into account the outcome of Proposal No. 1. the advisory vote when considering future executive compensation arrangements.



RECOMMENDATION AND VOTERecommendation and Vote

Under NASDAQ Marketplace Rule 5635,the Company’s Bylaws, the affirmative vote of a majority of the votes cast is required for stockholder approval of the proposal to approve Proposal 2.  The effect of an abstention is the issuance of shares ofsame as a vote “AGAINST” the Company’s common stock issuable upon conversion of the Series B Preferred Stock and exercise of the Warrants.  Abstentions and brokerproposal.  Broker non-votes are not counted as votes cast and will not be counted in determining whether the proposal has been approved.



The Board of Directors recommends that you vote “FOR” approval of issuance of shares of the Company’s common stock issuable upon conversion of the Series B Preferred Stock and exercise of the Warrants.Proposal 2.

PROPOSAL 3  –

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The appointment of the Company’s independent registered public accounting firm is made annually by the Audit Committee.  The Audit Committee, with the approval of the Board of Directors, has appointed BKD, LLP to serve as the Company’s independent registered public accounting firm for 2017, subject to ratification by stockholders. BKD, LLP audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2016.  

One or more representatives of BKD, LLP is expected to be present at the Meeting to respond to appropriate questions from stockholders and will have the opportunity to make a statement should he or she desire to do so.

Recommendation and Vote

The affirmative vote of a majority of the shares of common stock represented at the Meeting, in person or by proxy, and entitled to vote on the proposal, is required to ratify the appointment of BKD, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.  The effect of an abstention is the same as a vote “AGAINST” Proposal 3.  Even if the appointment of BKD, LLP is ratified by the stockholders, the Audit Committee, in its discretion, could decide to engage another firm if the Audit Committee determines such action is necessary or desirable.  If the appointment of BKD, LLP is not ratified, the Audit Committee will reconsider the appointment (but may decide to maintain the appointment).

The Board of Directors recommends that you vote “FOR” Proposal 3.

PROPOSAL 4 –

Amendment to our Certificate of Incorporation to Effect the Reverse Stock Split

General

Our Board of Directors proposes an amendment to our Certificate of Incorporation that would authorize our Board of Directors to effect the Reverse Stock Split.  The proposed amendment to our Certificate of Incorporation is attached hereto as Exhibit A.  If approved by the Company’s stockholders, the Reverse Stock Split would permit, but not require, the Board of Directors to effect the Reverse Stock Split at any time prior to the one-year anniversary of the Meeting (May 31, 2018).  The specific ratio for the Reverse Stock Split will range from 1-for-5 to 1-for-8, as selected by the Board of Directors following stockholder approval of the Reverse Stock Split.  If this proposal is approved, the Board of Directors may, in its discretion, implement the Reverse Stock Split using any of the ratios set forth in this proposal.  The Board of Directors may also determine in its discretion not to proceed with the Reverse Stock Split.  In determining which, if any, of the alternative Reverse Stock Split ratios to implement, as well as the timing of the implementation of the Reverse Stock Split, the Board of Directors may consider, among other factors, the following:

The Reverse Stock Split will result in a reduction in the number of shares of common stock owned by each stockholder.  As an example, if the Reverse Stock Split is approved by stockholders and the Board of Directors selects a 1-for-5 ratio, a stockholder who currently owns 5,000 shares of common stock before the Reverse Stock Split would own 1,000 shares of common stock after the Reverse Stock Split.

The Company does not expect the Reverse Stock Split to have any economic effect on the holders of the Company’s common stock, Series B Preferred Stock, Warrants or stock options, except to the extent that the Reverse Stock Split will result in fractional shares being cashed out.

To avoid the existence of fractional shares of our common stock, stockholders of record who would otherwise hold fractional shares of our common stock as a result of the Reverse Stock Split will be entitled to receive a cash payment (without interest and subject to applicable withholding taxes) in lieu of such fractional shares, as described under “— Fractional Shares and Odd Lots” below.

Concurrently with the Reverse Stock Split, if approved and implemented, the Company would also file an amendment to our Certificate of Incorporation to proportionately reduce the number of authorized shares of common stock.  For example, if the Reverse Stock Split is approved by stockholders and the Board of Directors selects a 1-for-5 ratio for the Reverse Stock Split, the Company would file an amendment to our Certificate of Incorporation to reduce the number of authorized shares of common stock from 50,000,000 to 10,000,000.  If the Board of Directors determines in its discretion not to proceed with the Reverse Stock Split, it would also not implement the amendment to the Certificate of Amendment to reduce the number of authorized shares of common stock.

Although the number of outstanding shares of our common stock would decrease following the Reverse Stock Split, we do not intend for the Reverse Stock Split to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

Purpose of the Reverse Stock Split

Our Board of Directors is proposing the Reverse Stock Split to stockholders with the primary intent of increasing the market price at which our common stock trades.  The Board believes that the current market price of the common stock may affect its acceptability to certain types of investors and that the anticipated increase in the market price per share resulting from the Reverse Stock Split will make our common stock more attractive to a broader range of investors.  Since January 1, 2016 through April 17, 2017, the closing price of our common stock as reported on NASDAQ ranged from a low of $[] per share to a high of $[] per share.  Many brokerage houses and institutional investors have internal policies and practices that either

prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers.  In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.  Furthermore, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of our common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher.  Moreover, certain broker-dealers have established a minimum price for the shares of stock that may be used as collateral for securities transactions, including margin.  For these reasons, we believe that the Reverse Stock Split may make our common stock a more attractive investment for certain investors, which we in turn believe may enhance the liquidity of the holders of our common stock.

Although the Reverse Stock Split is being proposed for the purpose of increasing the market price of the Company’s common stock, it should be emphasized that there can be no assurance that such price increase can be achieved or maintained.  A number of factors will influence the future trading price of our common stock, and many of those factors are not within the Company’s control.  As a result, there can be no assurance that the Reverse Stock Split, if approved by stockholders and implemented by the Board of Directors, will result in the intended benefits described above, including that the market price of the common stock will increase following the Reverse Stock Split (either at all or in proportion to the reduction in the number of shares of common stock outstanding before the Reverse Stock Split), or that the market price of our common stock will not decrease in the future.  Accordingly, there is a risk that the total market capitalization of our common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. 

Effect on Outstanding Preferred Shares, Warrants and Stock Options

If the Reverse Stock Split is approved by stockholders and implemented by the Board of Directors, the conversion price of our Series B Preferred Stock in effect immediately prior to the date of the Reverse Stock Split becomes effective, which conversion price is used to determine the number of shares of common stock into which the Company’s Series B Preferred Stock may be converted, will be proportionately increased (calculated to the nearest 1/10th of a cent).  For example, if the Reverse Stock Split is approved by stockholders and the Board of Directors selects a 1-for-5 ratio for the Reverse Stock Split, the conversion price of our Series B Preferred Stock would increase by a multiple of five (to $8.75 per share assuming that the current conversion price of $1.75 per share is in effect immediately prior to the date of the Reverse Stock Split).

If the Reverse Stock Split is approved by stockholders and implemented by the Board of Directors, proportionate adjustments will also be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options and Warrants entitling the holders thereof to purchase shares of our common stock.  For example, if the Reverse Stock Split is approved by stockholders and the Board of Directors selects a 1-for-5 ratio for the Reverse Stock Split, the number of shares of common stock issuable upon exercise of each Warrant will be decreased by a multiple of five, and the exercise price under each Warrant will be correspondingly increased by a multiple of five (to $9.25 per share assuming that the current exercise price of $1.85 per share is in effect immediately prior to the date of the Reverse Stock Split).

Effect on Number of Stockholders and Par Value

As of the record date of the Meeting, the Company had approximately [] holders of record of the Company’s common stock.  The Company does not expect the Reverse Stock Split to result in any material reduction in the number of record holders of the Company’s common stock.

The proposed amendment to the Company’s Certificate of Incorporation to affect the Reverse Stock Split will not affect the par value of the Company’s common stock, which will remain at $0.01 per share.

Reduction in Stated Capital

As a result of the Reverse Stock Split, the stated capital on the Company’s balance sheet attributable to common stock, which consists of the par value per share of the Company’s common stock multiplied by the aggregate number of shares of common stock issued and outstanding, will be reduced in proportion to the size of the Reverse Stock Split. Correspondingly, the additional paid-in capital account, which consists of the difference between the Company’s stated capital and the aggregate amount paid to the Company upon issuance of all currently outstanding shares of the Company’s common stock, will be credited with the amount by which the stated capital is reduced.  The Company’s stockholders’ equity, in the aggregate, will remain unchanged.

Procedure for Affecting the Reverse Stock Split; Exchange of Stock Certificates 

If our stockholders approve the Reverse Stock Split, and if and when our Board of Directors determines to effect the Reverse Stock Split (on or prior to May 31, 2018), we will file a Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware.  After the filing and effectiveness of the Certificate of Amendment, shares of our common stock issued and outstanding (“Old Shares”) will be converted into fully paid and nonassessable shares of our common stock (“New Shares”) at the reverse stock split ratio selected by the Board of Directors.  Holders of any fractional shares that result from the Reverse Stock Split will receive cash in lieu of these fractional shares. The text of the Certificate of Amendment to effect the Reverse Stock Split will be in substantially the form attached hereto as Exhibit A.  The text of the form of the amendment to our Certificate of Incorporation attached to this proxy statement is subject to modification to include changes as may be required by the Office of the Secretary of State of the State of Delaware and as our Board of Directors deems necessary and advisable to affect the Reverse Stock Split.

Upon the effectiveness of the Reverse Stock Split, the Company intends to treat shares held by stockholders through a broker, bank or other nominee (i.e., stockholders who hold in “street name”) in the same manner as registered stockholders whose shares are registered in their names.  Brokers, banks and other nominees will be instructed to affect the Reverse Stock Split for their beneficial holders who hold shares of our common stock in street name.  However, these brokers, banks and other nominees may have different procedures for processing the Reverse Stock Split and making payment for fractional shares than those procedures that apply to registered stockholders.   Stockholders who hold shares of our common stock with a broker, bank or other nominee and who have any questions in this regard are encouraged to contact their brokers, banks or other nominees.

Stockholders holding shares of our common stock in certificated form will be sent a transmittal letter by our transfer agent, which will serve as the Company’s exchange agent in effecting the exchange of certificates following the effectiveness of the Reverse Stock Split.  The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing shares of our common stock (the “Old Certificates”) to the exchange agent in exchange for certificates representing the appropriate number of New Shares (the “New Certificates”).  No New Certificates will be issued to a stockholder until the stockholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal and evidence of ownership of the Old Certificates as the Company may require, to the exchange agent.

STOCKHOLDERS SHOULD NOT FORWARD THEIR OLD CERTIFICATES TO THE EXCHANGE AGENT UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL, AND THEY SHOULD ONLY SEND IN THEIR OLD CERTIFICATES WITH THE LETTER OF TRANSMITTAL.

No stockholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates.  Stockholders will then receive new New Certificates representing the number of whole shares of our common stock that they are entitled to as a result of the Reverse Stock Split.  Until surrendered, the Company will deem outstanding Old Certificates held by stockholders to be cancelled and only to represent the number of whole New Shares to which these stockholders are entitled.  Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates.  If a stockholder is entitled to a payment in lieu of any fractional share, this payment will be made as described below under “— Fractional Shares and Odd Lots.” Warrants will be adjusted automatically in the event of a Reverse Stock Split.

Except for any changes as a result of the treatment of fractional shares, each stockholder will hold the same percentage of our common stock outstanding after the Reverse Stock Split as that stockholder did immediately prior to the Reverse Stock Split. 

The Company presently does not intend to seek any change in its status as a reporting company for federal securities law purposes, either before or after the Reverse Stock Split.   Our common stock is currently registered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as a result, we are subject to the periodic reporting and other requirements of the Exchange Act.  The Reverse Stock Split will not affect the registration of our common stock under the Exchange Act.  Our common stock will continue to be listed on the Nasdaq Capital Market under the symbol “CFBK”  provided that the letter “D” will be added to the end of the trading symbol for a period of 20 trading days after the Reverse Stock Split to indicate that a reverse stock split has occurred. 

After the Reverse Stock Split, our common stock will have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number, which is a number used to identify the Company’s equity securities, and stock certificates with the older

CUSIP number will need to be exchanged for stock certificates with the new CUSIP number by following the procedures described above. 

Fractional Shares and Odd Lots 

The Company will not issue fractional shares with respect to the Reverse Stock Split.  In lieu of a fraction of a share of common stock, each stockholder who otherwise would have been entitled to a fraction of a share will be paid cash (without interest and subject to applicable withholding taxes) in an amount equal to the product obtained by multiplying (i) the closing price per share of the common stock on NASDAQ as of the close of business on the business day immediately preceding the effective time of the Reverse Stock Split.  No stockholder will be entitled to dividends, voting rights or any other rights in respect of any fractional share interest.  The Company’s stockholder list shows that some of our outstanding common stock is registered in the names of clearing agencies and broker nominees.  Because the Company does not know the number of shares held by each beneficial owner for whom the clearing agencies and broker nominees are record holders, the Company cannot predict with certainty the number of fractional shares that will result from the Reverse Stock Split or the total number of additional shares that would be issued as a result of fractional shares. However, the Company does not expect that the amount will be material.  The Company does not expect the Reverse Stock Split to result in a significant reduction in the number of record holders.  If approved, the Reverse Stock Split will result in some stockholders owning “odd lots” of less than 100 shares of our common stock.  Brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.

If a stockholder who holds shares in certificated form is entitled to payment in lieu of any fraction of a share, the stockholder will receive a check as soon as practicable following the effectiveness of the Reverse Stock Split and after the stockholder has submitted an executed transmittal letter and surrendered all Old Certificates.  If a stockholder who holds shares in book-entry form is entitled to a payment in lieu of any fraction of a share, the stockholder will receive a check as soon as practicable after the effectiveness of the Reverse Stock Split without need for further action by the stockholder. Those stockholders who hold shares of our common stock with a bank, broker, custodian or other nominee should contact their bank, broker, custodian or other nominee for information on the treatment and processing of fractional shares by their bank, broker, custodian or other nominee.  By signing and cashing a check, stockholders will warrant that they owned the shares of our common stock for which they received payment.  The cash payment to be made in lieu of issuing fractional shares is subject to applicable federal and state income tax and state abandoned property laws.  Stockholders will not be entitled to receive interest for the period of time between the effectiveness of the Reverse Stock Split and the date payment is received.

Possible Effects of Approving the Proposed Reverse Stock Split 

While one effect of the proposed Reverse Stock Split may be to increase the price of our common stock, there can be no assurance that the total market capitalization of our common stock after the proposed Reverse Stock Split will be equal to or greater than the total market capitalization before the proposed Reverse Stock Split or that the per share market price of our common stock following the Reverse Stock Split will remain higher than the current per share market price.  There can be no assurance that the market price per share of the New Shares after the Reverse Stock Split will rise or remain constant in proportion to the reduction in the number of the Old Shares outstanding before the Reverse Stock Split.  Accordingly, the total market capitalization of our common stock after the proposed Reverse Stock Split may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of our common stock following the Reverse Stock Split may not remain higher than the market price prior to the proposed Reverse Stock Split.

No Dissenter’s Rights 

Under Delaware law, our stockholders are not entitled to dissenter’s rights with respect to the proposed approval of the Reverse Stock Split.

Federal Income Tax Consequences of the Reverse Stock Split 

The following is a summary of certain material U.S. federal income tax consequences of the Reverse Stock Split to holders of our common stock.  It addresses only the tax consequences to a U.S. holder that holds the pre-Reverse Stock Split shares and post-Reverse Stock Split shares as capital assets (generally, property held for investment).  This summary does not purport to address all of the tax consequences that may be relevant to any particular beneficial owner of our common stock, and does not address the tax consequences to stockholders subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, U.S. expatriates, pass-through entities and investors in those entities, dealers in securities, mutual funds, foreign stockholders, stockholders who hold the pre-Reverse Stock Split shares as part of a straddle,

hedge, conversion or other risk management transaction, stockholders who hold the pre-Reverse Stock Split shares as qualified small business stock within the meaning of Section 1202 of the Internal Revenue Code, traders in securities that elect to use the mark-to-market method of accounting, retirement or pension plans, stockholders who are subject to the alternative minimum tax provisions of the Internal Revenue Code, and stockholders who acquired their pre- Reverse Stock Split shares pursuant to the exercise of employee stock options or otherwise as compensation.  This summary is based on the Internal Revenue Code, existing and proposed Treasury Department regulations promulgated thereunder, published Internal Revenue Service (“IRS”) rulings, and court decisions, all as currently in effect as of the date hereof, and all of which are subject to change, possibly with retroactive effect. Any such change could affect the continuing validity of this summary. It does not address tax considerations under state, local, foreign, and other laws. Furthermore, we have not obtained a ruling from the IRS or an opinion of legal or tax counsel with respect to the consequences of the Reverse Stock Split.   Each Stockholder SHOULD Consult WITH His, HER or ITS Own Tax Advisor REGARDING the SPECIFIC Tax Consequences TO THE STOCKHOLDER of the Reverse Stock Split, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS. 

For purposes of this summary, a “U.S. holder” is a beneficial owner of our common stock who for U.S. federal income tax purposes is (a) a citizen or resident of the United States, (b) a corporation, or an entity treated as a corporation, created or organized in or under the laws of the United States or any state or political subdivision thereof, (c) a trust that (i) is subject to (A) the primary supervision of a court within the United States and (B) the authority of one or more United States persons to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person, or (d) an estate that is subject to U.S. federal income tax on its income regardless of its source.

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. If you are a partnership, or a partner in such partnership, holding our common stock, you should consult your tax advisor.

The Reverse Stock Split should be treated as a recapitalization under Section 368(a)(1)E) of the Internal Revenue Code for U.S. federal income tax purposes. Therefore, except as described below with respect to the receipt of cash in lieu of fractional shares, no gain or loss will be recognized by a U.S. holder of our common stock on account of the Reverse Stock Split. Accordingly, the aggregate tax basis in the common stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis in the common stock surrendered (excluding the portion of the tax basis that is allocable to any fractional share), and the holding period for the common stock received should include the holding period for the common stock surrendered.

A U.S. holder who receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split will recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. holder’s adjusted tax basis in the shares of our common stock surrendered that is properly allocable to such fractional share of our common stock. Such capital gain or loss will be long term capital gain or loss if the U.S. holder’s holding period for our common stock surrendered exceeded one year at the effective time of the Reverse Stock Split. The deductibility of capital losses is subject to limitation under the Internal Revenue Code.

U.S.holders will be subject to backup withholding (at the current applicable rate of 28%) on the payment of cash in lieu of a fractional share of our common stock if they do not provide proof of an applicable exemption or furnish their taxpayer identification number and otherwise comply with all applicable requirements of the backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the U.S. holder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS.

Recommendation and Vote

Under Delaware law and the Company’s Certificate of Incorporation, as amended, the affirmative vote of the holders of a majority of the shares of common stock of the Company which are outstanding and entitled to vote is required to approve the proposal to grant discretionary authority to the Company’s Board of Directors to amend our Certificate of Incorporation, as amended, to effect the Reverse Stock Split.  The effect of an abstention or broker non-vote is the same as a vote “AGAINST” the proposal.

The Board of Directors recommends that you vote “FOR” Proposal 4.

PROPOSAL 5 –

ADJOURNMENT OF THE MEETING

In the event there are not sufficient votes at the time of the Meeting to approve the proposed amendment to our Certificate of Incorporation to effect the Reverse Stock Split (Proposal 4), our Board of Directors may propose to adjourn the Meeting to a later date or dates in order to permit the solicitation of additional proxies (the “Adjournment”).  Pursuant to Delaware law, the Board of Directors is not required to fix a new record date to determine the stockholders entitled to vote at the adjourned meeting.  If the Board of Directors does not fix a new record date, it is not necessary to give any notice of the time and place of the adjourned meeting other than an announcement at the meeting at which the adjournment is taken.  If a new record date is fixed, notice of the adjourned meeting will be given as in the case of an original meeting.

In order to permit proxies that have been received by us at the time of the Meeting to be voted for an adjournment, if necessary, we are submitting the Adjournment to stockholders as a separate matter for consideration.  If approved, the Adjournment will authorize the holder of any proxy solicited by our Board of Directors to vote in favor of adjourning the Meeting and any later adjournments.  If our stockholders approve the Adjournment, we may adjourn the Meeting, and any adjourned session of the Meeting, to use the additional time to solicit additional proxies in favor of the proposal regarding the Reverse Stock Split, including the solicitation of proxies from our stockholders who have previously voted against the proposal.  Among other things, approval of the Adjournment could mean that, even if proxies representing a sufficient number of votes against the proposal regarding the Reverse Stock Split have been received, we could adjourn the Meeting without a vote on that proposal and seek to convince the holders of those shares to change their votes to votes in favor of the proposal.

Recommendation and Vote

Under the Company’s Bylaws, the affirmative vote of a majority of the votes cast is required to approve the proposal to adjourn the Meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the Meeting to approve Proposal 4.  The effect of an abstention is the same as a vote “AGAINST” the proposal.  Broker non-votes will not be counted in determining whether the proposal has been approved.

The Board of Directors recommends that you vote “FOR” Proposal 5.



BENEFICIAL OWNERSHIP OF

COMPANY COMMON STOCK





The following table provides information as of [June 30], 2014April 17, 2017 about the persons known by the Company to be beneficial owners of more than 5% of the Company’s outstanding common stock (excluding Edward W. Cochran, whose beneficial ownership is disclosed in the following table for directors and named executive officers of the Company).stock.  A person may be considered to beneficially own any shares of common stock over which he or she has, directly or indirectly, sole or shared voting or investment power.  A provision in the Company’s Certificate of Incorporation eliminates the ability of any beneficial owner of more than 10% of the Company’s outstanding common stock to vote any shares in excess of this 10% limit.

  As of April 17, 2017, the Company was not aware of any person who beneficially owned more than 10% of the Company’s outstanding common stock.





APPENDIXEXHIBIT A



CERTIFICATE OF DESIGNATIONSAMENDMENT

OF

series b preferred stockCERTIFICATE OF INCORPORATION,

OfOF

CENTRAL FEDERAL CORPORATION

Central Federal Corporation,CENTRAL FEDERAL CORPORATION,  a Delaware corporation (the “Corporation”), in accordance with the provisions of Section 151organized and existing under and by virtue of the Delaware General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify that the following resolution was duly adopted bycertify:

FIRST:  That at a meeting of the Board of Directors of the Corporation, on March 31, 2014:

RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board of Directors”) by the provisions of Article FOURTHresolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of the Corporation, (the “declaring said amendment to be advisable and calling a meeting of the stockholders of the Corporation for consideration thereof.  The resolution setting forth the proposed amendment is as follows:

RESOLVED, that Article Fourth, paragraph A of the Certificate of Incorporation,”), there as amended, of the Corporation is hereby created, outamended in its entirety to read as follows:

“A.The total number of shares of all classes of stock which the Corporation shall have authority to issue is [11,000,000][10,090,909][9,333,333][8,692,307][8,142,857] [7,666,666][7,250,000] consisting of :

Upon effectiveness (the “Effective Time”) pursuant to the General Corporation Law of the 1,000,000State of Delaware of this Certificate of Amendment, each [5][5.5][6][6.5][7][7.5][8] shares of preferred stock,the Corporation’s Common Stock, par value $0.01 per share, issued and outstanding immediately prior to the Effective Time will automatically be reclassified into one (1) validly issued, fully paid and non-assessable share of Common Stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”).  No fractional shares of Common Stock will be issued in connection with the Reverse Stock Split.  Stockholders who otherwise would be entitled to receive fractional shares of Common Stock will be entitled to receive cash (without interest or deduction) from the Corporation’s transfer agent in lieu of such fractional share interests, upon receipt by the Corporation’s transfer agent of the Corporation authorizedstockholder’s Old Certificates (as defined below), in Article FOURTHan amount equal to the product obtained by multiplying (i) the closing price per share of the Certificate of Incorporation, a seriesCommon Stock on The NASDAQ Stock Market as of the preferred stock consistingclose of 480,000 shares, which series shall havebusiness on the following powers, designations, preferences and relative, participating, optional or other rights, andbusiness day immediately preceding the following qualifications, limitations and restrictions (in addition to any powers, designations, preferences and relative, participating, optional or other rights, and any qualifications, limitations and restrictions, set forth inEffective Time, by (ii) the Certificate of Incorporation which are applicable to the preferred stock of the Corporation):

Section 1.Designation and Amount.  There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “6.25% Non-Cumulative Convertible Perpetual Preferred Stock, Series B” (the “Series B Preferred Stock”). The authorized number of shares of Series B Preferred Stock shall be 480,000 shares, each having a par value of $0.01 per share and a liquidation preference of $25.00 per share.  Outstanding shares of Series B PreferredCommon Stock that are purchased or otherwise acquired bywould have been exchanged for the Corporation, or converted into Common Shares, shall be cancelled and shall revert to authorized but unissued shares of preferred stock undesignated as to series.

Section 2.Definitions.  As used herein with respectfractional share.  Each certificate that immediately prior to the Series B Preferred Stock, in addition to those terms defined herein, the following terms shall have the following meanings:

(a) “Affiliate” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

(b)“Business Day” shall mean any day except Saturday, Sunday and any day on which banking institutions in the State of Ohio generally are authorized or required by law or other governmental actions to close.