CityFed Financial Begins Restructure

21 October 2005

CityFed Financial Corp.
(OTC: CTYF) (OTC: CTYFP) and (OTC: CTYFN) (the "Company") announced that
its board has agreed to and implemented a restructuring of the Company and
the appointment of Stephen Lange Ranzini as President of the Company to
lead the further restructuring of the Company.

Today's restructuring will see the Company's Note Holders take a secured
lien against the Company's subsidiary, CFF Services Corp., in exchange for
eliminating any recourse against the Company's other assets for their debt.
This debt obligation arose originally from funds they had advanced the
Company to support the Company's successful defense of various lawsuits
including a multi-year lawsuit the Company won at the U.S. Supreme Court,
FDIC v. Atherton, which established the standard of care that directors of
federally insured financial institutions owe their financial institutions.
In FDIC v. Atherton the U.S. Supreme Court opined that unless state law
holds directors to a higher standard, the directors of federally insured
financial institutions are never personally responsible for the bad things
that happen to their financial institutions unless they do something that
is actually wrongful. The FDIC was never able to prove that the previous
directors of CityFed had done anything wrongful, yet the shareholders of
the Company were nearly wiped out by the FDIC's prosecution of the case in
coordination with the Office of Thrift Supervision.

Mr. Ranzini commented, "Today's restructuring eliminates the very real risk
that the shareholders of the Company would be completely wiped out by the
last remaining debt of the Company. The future proposed restructuring that
I will lead is intended to result ultimately in one class of equity in the
Company, versus the three classes of equity securities the Company has
today. While the Common Stock shareholders and Junior Preferred Stock
shareholders will be severely diluted in the proposed restructuring,
shareholders with 1,000 shares or more will retain at least a portion of
their investment in the reorganized Company."

Mr. Ranzini is Chairman of Jove Corporation, which owns 18% of CityFed's
senior equity security, the Senior Convertible Series B Preferred Stock,
and has served as a director of CityFed since 1990 (the year after City
Federal Savings and Loan collapsed) representing the interests of the
Senior Convertible Series B Preferred Stock shareholders as one of their
two representatives on the Company's board of directors. Mr. Ranzini also
serves as President and CEO of NASDAQ listed University Bancorp, Inc., the
parent company of University Bank of Ann Arbor, Michigan, which manages a
total of $2.9 billion in assets. Mr. Ranzini grew up in Martinsville, New
Jersey.

CityFed Financial Corp. (OTC: CTYF) owns 100% of CFF Services Corp., a hard
money first and second lien mortgage lender in New England with assets of
$5 million and the Company itself holds a portfolio of $450,000 in cash and
investment securities. CityFed Financial Corp. was founded as the bank
holding company for City Federal Savings & Loan, a $10 billion savings and
loan, which was the largest financial institution headquartered in New
Jersey and the largest savings and loan east of the Mississippi at the time
of its seizure by the Resolution Trust Corporation in 1989 during the
Savings & Loan Crisis of the late 1980s. CityFed's demise was primarily
caused by the deregulation of bank deposit interest rate ceilings by
Congress and by a clause in the 1989 FIRREA Act of Congress that prevented
regulatory goodwill that City Federal Savings and Loan held from counting
towards regulatory capital. City Federal Savings and Loan had been enticed
into acquiring a number of savings and loans in Florida and New Jersey by
its primary government regulator, the Federal Home Loan Bank Board, and
when Congress changed the rules, the acquisitions proved fatal.

Any prediction of the future is inherently not assured. Investors should
be advised that any prediction in this release is intended to be covered by
the Safe Harbor provisions of Section 21E of the Securities Exchange Act of
1934.

Company Contact:
Stephen Lange Ranzini
President
CityFed Financial Corp.
Phone: (734) 741-5858 xt 226
Fax: (734) 741-5859
Email: Email Contact
SOURCE: CityFed Financial Corp.