UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the Quarterly Period Ended March 31, 2003

                                       OR

( )             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from _____ to ______


                         Commission File Number 0-18279
                         ------------------------------


                        TRI-COUNTY FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Maryland                                          52-1652138
-------------------------------                           --------------------
(State of other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                             Identification No.)

 3035 Leonardtown Road, Waldorf, Maryland                             20601
-----------------------------------------                          ----------
 (Address of principal executive offices)                          (Zip Code)

                                 (301) 843-0854
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


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

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

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes      No X
                                               ---     ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practical date.

     As of April 25, 2003  registrant had  outstanding  766,374 shares of Common
Stock.


                                       1
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION

FORM 10-Q                                                                INDEX
                                                                         -----



PART I - FINANCIAL INFORMATION                                           PAGE

   Item 1 - Financial Statements (Unaudited)

     Consolidated Balance Sheets - March 31, 2003
       and December 31, 2002                                              3

     Consolidated Statements of Income and Comprehensive Income -
       Three Months Ended March 31, 2003 and 2002                         4

     Consolidated Statements of Cash Flows - Three Months
       Ended March 31, 2003 and 2002                                      5 - 6

     Notes to Consolidated Financial Statements                           7

Item 2- Management's Discussion and Analysis of Financial Condition
       and Results of Operations                                          8 - 13

Item 3 - Quantitative and Qualitative Disclosure about Market Risk        14
Item 4 - Controls and Procedures                                          14

PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K                                 15


SIGNATURES                                                                16



                                       2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS MARCH 31, 2003 (UNAUDITED) AND DECEMBER 31, 2002
<TABLE>
<CAPTION>
                                                      ASSETS
                                                                                 March 31, 2003    December 31, 2002
<S>                                                                               <C>                 <C>
Cash and due from banks                                                           $ 11,891,241        $ 10,356,932
Interest-bearing deposits with banks                                                19,865,391          15,179,851
Investment securities available for sale - at fair value                            46,941,211          41,826,113
Investment securities held to maturity - at amortized cost                           2,448,207           2,841,807
Stock in Federal Home Loan Bank and Federal Reserve Bank - at cost                   2,736,750           2,736,750
Loans held for sale                                                                  2,683,680           1,262,667
Loans receivable - net of allowance for loan losses
of $2,319,460 and $2,314,074, respectively                                         190,961,058         197,449,282
Premises and equipment, net                                                          5,590,123           5,736,395
Foreclosed real estate                                                                 706,014             716,014
Accrued interest receivable                                                          1,058,807           1,042,453
Other assets                                                                         8,921,260           3,025,431
                                                                                 -------------       -------------

Total assets                                                                     $ 293,803,742       $ 282,173,695
                                                                                 =============       =============

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Noninterest-bearing deposits                                                      $ 33,215,713        $ 33,045,310
Interest-bearing deposits                                                          177,925,346         169,979,802
                                                                                 -------------       -------------
Total deposits                                                                     211,141,059         203,025,112
Short-term borrowings                                                                  155,647             752,298
Long-term debt                                                                      53,074,408          48,170,000
Accrued expenses and other liabilities                                               2,262,780           3,353,520
                                                                                 -------------       -------------

Total liabilities                                                                  266,633,894         255,300,930
                                                                                 -------------       -------------
STOCKHOLDERS' EQUITY:
Common stock - par value $.01; authorized - 15,000,000 shares;
issued - 762,411 and 759,778 shares, respectively                                        7,624               7,598
Additional Paid in Capital                                                           7,787,567           7,716,906
Retained earnings                                                                   19,350,162          18,817,615
Accumulated other comprehensive income                                                 134,638             493,691
Unearned ESOP shares                                                                  (110,143)           (163,045)
                                                                                 -------------       -------------

Total stockholders' equity                                                          27,169,848          26,872,765
                                                                                 -------------       -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $ 293,803,742       $ 282,173,695
                                                                                 =============       =============
</TABLE>

See notes to consolidated financial statements

                                       3
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS ENDED
                                                                                      MARCH 31,
                                                                             -----------------------------
                                                                                 2003              2002
<S>                                                                          <C>               <C>
INTEREST INCOME:
   Interest and fees on loans                                                $ 3,350,974       $ 3,489,660
   Taxable interest and dividends on investment securites                        530,773           654,697
   Interest on bank deposits                                                      36,637            23,242
                                                                             -----------       -----------
        Total interest income                                                  3,918,384         4,167,599
                                                                             -----------       -----------

INTEREST EXPENSE:
   Interest on deposits                                                          747,427           909,723
   Interest on long term debt                                                    613,101           639,905
   Interest on other borrowings                                                      766               360
                                                                             -----------       -----------
        Total interest expense                                                 1,361,294         1,549,988
                                                                             -----------       -----------

NET INTEREST INCOME                                                            2,557,090         2,617,611
PROVISION FOR LOAN LOSSES                                                          5,386            70,000
                                                                             -----------       -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                            2,551,704         2,547,611
                                                                             -----------       -----------
NONINTEREST INCOME:
   Loan appraisal, credit, and miscellaneous charges                              27,396            71,788
   Net gain on sale of loans held for sale                                       127,095           102,758
   Service charges                                                               228,335           218,342
   Other income                                                                    5,128             4,461
                                                                             -----------       -----------
        Total noninterest income                                                 387,954           397,349
                                                                             -----------       -----------

NONINTEREST EXPENSE:
Salary and employee benefits                                                   1,129,326         1,062,869
Occupancy expense                                                                168,317           167,527
Advertising                                                                       63,734            72,544
Data processing expense                                                           85,305           103,523
Depreciation of furniture, fixtures, and equipment                               114,900            43,999
Telephone communications                                                          39,076            44,188
ATM expenses                                                                      58,480            50,511
Office supplies                                                                   23,465            36,221
Office equipment expense                                                          45,342            59,662
Other                                                                            220,602           288,250
                                                                             -----------       -----------
Total noninterest expense                                                      1,948,547         1,929,294
                                                                             -----------       -----------

INCOME BEFORE INCOME TAXES                                                       991,111         1,015,666
INCOME TAXES                                                                     350,000           364,600
                                                                             -----------       -----------
NET INCOME                                                                       641,111           651,066

OTHER COMPREHENSIVE INCOME, NET OF TAX
   Net unrealized holding losses arising during the period                      (359,053)         (157,648)
                                                                             -----------       -----------
COMPREHENSIVE INCOME                                                         $   282,058       $   493,418
                                                                             ===========       ===========
EARNINGS PER SHARE
   Basic                                                                     $       .84       $       .86
   Diluted                                                                           .80               .82
</TABLE>

See notes to consolidated financial statements

                                       4
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                 ----------------------------
                                                                                   2003               2002
<S>                                                                              <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $    641,111       $    651,066
Adjustments to reconcile net income to net
   cash used by operating activities:
   Valuation allowance on foreclosed real estate                                        --             20,000
   Provision for loan losses                                                         5,386             70,000
   Depreciation and amortization                                                   150,300            119,499
   Net amortization of premium/discount on investment securities                    55,599               (109)
   Deferred income tax benefit                                                     (29,000)                --
   Increase in accrued interest receivable                                         (16,354)           (65,391)
   Decrease in deferred loan fees                                                  (58,237)            (7,164)
   Decrease in accounts payable, accrued expenses,
      and other liabilities                                                     (1,090,740)           (82,439)
   Increase in other assets                                                     (5,678,906)          (446,895)
   Origination of loans held for sale                                           (5,980,350)        (6,376,035)
   Gain on sales of loans held for sale                                           (127,095)          (102,758)
   Proceeds from sale of loans held for sale                                     4,686,432          4,847,758
                                                                              ------------       ------------

          Net cash used by operating activities                                 (7,441,854)        (1,372,468)
                                                                              ------------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net (increase) decrease in interest-bearing deposits with banks              (4,685,540)           727,010
   Purchase of investment securities available for sale                        (19,288,524)       (18,653,097)
   Proceeds from sale, redemption or principal payments
    of investment securities available for sale                                 13,570,852         17,717,374
   Purchase of investment securities held to maturity                                   --         (1,201,212)
   Proceeds from maturities or principal payments
    of investment securities held to maturity                                      393,600            509,762
   Loans originated or acquired                                                (27,514,040)       (15,228,719)
   Principal collected on loans                                                 34,055,115         21,473,078
   Purchase of premises and equipment                                               (4,028)          (353,250)
   Proceeds from foreclosed real estate                                             10,000                 --
                                                                              ------------       ------------

       Net cash (used) provided in investing activities                         (3,462,565)         4,990,946
                                                                              ------------       ------------
</TABLE>

                                       5
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (CONTINUED)
<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                               -----------------------------
                                                                                   2003              2002
<S>                                                                            <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase (decrease) in deposits                                         $ 8,115,947       $(2,124,962)
   Proceeds from long-term borrowings                                            5,000,000                 -
   Payments of long-term borrowings                                                (95,592)                -
   Net decrease in other borrowed funds                                           (596,651)       (1,097,934)
   Exercise of stock options                                                        31,158            37,830
   Net change in unearned ESOP shares                                               92,459            61,452
   Redemption of common stock                                                     (108,593)          (28,500)
                                                                               -----------       -----------

      Net cash provided (used) by financing activities                          12,438,728        (3,152,114)
                                                                               -----------       -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                            1,534,309           466,364

CASH AND CASH EQUIVALENTS - JANUARY 1                                           10,356,932           693,439
                                                                               -----------       -----------

CASH AND CASH EQUIVALENTS - MARCH 31                                           $11,891,241       $ 1,159,803
                                                                               ===========       ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest                                                                       $ 1,376,832       $ 1,670,605
                                                                               ===========       ===========
Income taxes                                                                   $   387,869       $   275,000
                                                                               ===========       ===========
</TABLE>

See notes to consolidated financial statements

                                       6
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

1.   BASIS OF PRESENTATION

     General - The  consolidated  financial  statements of Tri-County  Financial
     Corporation (the "Company") and its wholly owned subsidiary, Community Bank
     of Tri-County  (the "Bank")  included herein are unaudited;  however,  they
     reflect all adjustments  consisting only of normal recurring accruals that,
     in the opinion of  Management,  are necessary to present fairly the results
     for  the  periods  presented.  Certain  information  and  note  disclosures
     normally  included in  financial  statements  prepared in  accordance  with
     accounting  principles  generally  accepted in the United States of America
     have been condensed or omitted pursuant to the rules and regulations of the
     Securities  and  Exchange   Commission.   The  Company  believes  that  the
     disclosures are adequate to make the information  presented not misleading.
     There have been no significant changes to the Company's Accounting Policies
     as disclosed in the 2002 Annual  Report.  The results of operations for the
     three months  ended March 31, 2003 are not  necessarily  indicative  of the
     results of operations to be expected for the remainder of the year. Certain
     previously  reported  amounts  have been  restated  to  conform to the 2003
     presentation.

     It is suggested  that these  consolidated  financial  statements be read in
     conjunction with the consolidated  financial  statements and notes included
     in the Company's Annual Report for the year ended December 31, 2002.

2.   EARNINGS PER SHARE

     Basic  and  diluted  earnings  per  share,  have  been  computed  based  on
     weighted-average   common  and  common  equivalent  shares  outstanding  as
     follows:

                                         THREE MONTHS ENDED
                                              MARCH 31,
                                         ------------------
                                          2003        2002

                          Basic          758,954   758,760
                          Diluted        802,348   791,100


3.   STOCK OPTION AND INCENTIVE PLAN

     The Company has a stock option and incentive plan.  During the three months
     ended March 31, 2003 and 2002, no awards under stock option plans were made
     and no options awards vested during these periods.  For further information
     on the Company's  stock based  compensation  plans see the  Company's  2002
     Annual Report and Report on Form 10-K dated December 31, 2002.

                                       7
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION

This  document  contains  forward-looking  statements  within the meaning of the
Private  Securities  Litigation  Reform Act of 1995,  including  discussions  of
Tri-County  Financial  Corporation's  (the  "Company's")  goals,  strategies and
expected  outcomes;  estimates  of risks and future  costs;  and  reports of the
Company's   ability  to  achieve   its   financial   and  other   goals.   These
forward-looking  statements are subject to  significant  known and unknown risks
and  uncertainties  because  they are based  upon  future  economic  conditions,
particularly  interest  rates,   competition  within  and  without  the  banking
industry,  changes in laws and regulations applicable to the Company and various
other matters.  Because of these  uncertainties,  there can be no assurance that
actual  results,  performance  or  achievements  of the Company  will not differ
materially  from any future results,  performance or  achievements  expressed or
implied by these forward-looking statements.

GENERAL

The Company is a bank  holding  company  organized in 1989 under the laws of the
State of Maryland. It presently owns all the outstanding shares of capital stock
of  the  Community  Bank  of  Tri-County  (the  "Bank"),  a   Maryland-chartered
commercial  bank.  The Company  engages in no  significant  activity  other than
holding  the  stock  of the  Bank  and  operating  the  business  of  the  Bank.
Accordingly,  the  information  set forth in this  report,  including  financial
statements and related data, relates primarily to the Bank and its subsidiaries.

The Bank serves the  southern  Maryland  area  through its main office and eight
branches  located in  Waldorf,  Bryans  Road,  Dunkirk,  Leonardtown,  La Plata,
Charlotte Hall, and California,  Maryland. The Bank is engaged in the commercial
and retail banking  business as authorized by the banking  statutes of the State
of Maryland and applicable Federal regulations. The Bank accepts demand and time
deposits,  and originates loans to individuals,  associations,  partnerships and
corporations.  The Bank makes real estate loans including  residential first and
second  mortgage  loans,  home equity  lines of credit and  commercial  mortgage
loans. The Bank makes  commercial  loans including  secured and unsecured loans.
The Bank is a member of the Federal  Reserve and Federal Home Loan Bank ("FHLB")
Systems. The Savings Association  Insurance Fund ("SAIF") of the Federal Deposit
Insurance  Corporation  ("FDIC")  provides  deposit  insurance  coverage  up  to
applicable limits.

Since its conversion to a state chartered  commercial bank in 1997, the Bank has
sought to increase its commercial,  commercial real estate, construction, second
mortgage,  home equity,  and consumer  lending  business as well as the level of
transactional  deposits to levels  consistent  with similarly  sized  commercial
banks. As a result of this emphasis, the Bank's percentage of assets invested in
residential first mortgage lending and investment  securities has declined since
1997. Conversely,  targeted loan types have increased. The Bank has also seen an
increase  in  transactional  deposit  accounts  while  the  percentage  of total
liabilities   represented  by   certificates  of  deposits  has  also  declined.
Management believes that these changes will enhance the Bank's overall long-term
financial performance.

Management recognizes that the shift in composition of the Bank's loan portfolio
will tend to increase its exposure to credit  losses.  The Bank has continued to
evaluate  its  allowance  for  loan  losses  and  the  associated  provision  to
compensate  for the  increased  risk.  Any  evaluation of the allowance for loan
losses is inherently inexact and reflects management's expectations as to future
economic  conditions  in the  Southern  Maryland  area  as  well  as  individual
borrower's circumstances. Management believes that its allowance for loan losses
is adequate. For further information on the Bank's allowance for loan losses see
the discussion in the financial  condition  section of this form, as well as the
relevant  discussions  in the Form 10-K and  annual  report  for the year  ended
December 31, 2002.

In the last several quarters, the national economy has recovered fitfully from a
mild  recession  while our local economy has remained  strong in relation to the
national and statewide  economy.  Prospects for growth appear to be steady,  and
local employment remains strong. The Bank remains exposed to asset deterioration
should the local economy  experience a prolonged period of economic decline.  In
addition,  any Federal  Reserve  action on interest  rates may affect the Bank's
financial performance.

Loan  customers  have reacted to lower interest rates by continuing to refinance
higher rate loans.  Because the Bank does not wish to keep low rate,  long term,
fixed rate  residential  first mortgages in its portfolio,  these loans are than
sold to third parties with the Bank retaining servicing. These transactions have
led to a reduction in loan balances  with a  concomitant  reduction in provision
for loan losses, a continuing buildup of cash and short term investments,  and a
continued  flow of income from selling these loans.  Although the Bank continues
to generate a high level of  non-interest  income,  its net interest  income has
dropped  from the same  period in the prior year  despite an  increase  in asset
size.  This is the result of the lower interest  income earned on cash and short
term  investments  compared to the same  period in the prior  year.  Noninterest
expense and income tax rates were comparable to the prior year.

                                       8
<PAGE>

SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                                               MARCH 31,
                                                   -----------------------------
                                                       2003              2002
<S>                                                <C>                <C>
Condensed Income Statement
Interest Income                                    $3,918,384         $4,167,599
Interest Expense                                    1,361,294          1,549,988
Net Interest Income                                 2,557,090          2,617,611
Provision for Loan Loss                                 5,386             70,000
Noninterest Income                                    387,954            397,349
Noninterest Expense                                 1,948,547          1,929,294
Income Before Income Taxes                            991,111          1,015,666
Income Taxes                                          350,000            364,600
Net Income                                            641,111            651,066


Per Common Share
Basic Earnings                                     $     0.84         $     0.86
Diluted Earnings                                         0.80               0.82
Book Value                                              35.64              34.27
</TABLE>

RESULTS OF OPERATIONS

Net income for the three month  period  ended March 31,  2003  totaled  $641,111
($.84  basic and $.80  diluted  earnings  per  share)  compared  with a total of
$651,066 ($.86 basic and $.82 diluted earnings per share) for the same period in
the prior year.  This decrease of $9,955 or 1.5% was caused by a decrease in net
interest  income which was  partially  offset by a decrease in the provision for
loan losses.

For the three month  period ended March 31, 2003,  interest  income  declined by
$249,215 or 6.0% to $3,918,384. This decline was caused by the continued decline
in interest rates  particularly  the declines in the Prime Rate, and one, three,
and five year U.S.  Treasury rates. Many loan products are priced based on these
rates.  This decline in interest  rates was partially  offset by higher  average
asset balances.

Interest  expense also  decreased to $1,361,294 in the three month period ending
March 31, 2003 as compared to  $1,549,988 in the same period in the prior year a
decrease of $188,694 or 12.2%.  This  decrease was a reflection of the declining
interest rate  environment  experienced  during the last year.  Interest expense
also declined as a result of the Bank's increase in noninterest  bearing deposit
accounts.  The Bank's  ability to cut  interest  expense  was  inhibited  by the
historically  low  rates  paid on  deposits  prior to the  current  quarter.  As
interest  rates have  continued to fall on loans and  investments,  the Bank was
unable to reduce interest expense by the same amount as interest income fell.

Provision for loan losses declined from prior year levels to $5,386 from $70,000
for the three month  period  ending March 31, 2003 and 2002,  respectively.  The
decline in provision  expense was caused in part,  by a reduction in the size of
the Bank's loan portfolio.  Management will continue to periodically  review its
allowance  for loan  losses  and the  related  provision  and  adjust  as deemed
necessary.  This review will include a review of economic conditions  nationally
and locally,  as well as a review of the performance of significant  major loans
and the overall portfolio.

Noninterest  income  decreased  slightly to $387,954  for the three month period
ending  March 31,  2003, a decrease of $9,395 or 2.4% under the prior year total
of $397,349.  Loan appraisal,  credit,  and  miscellaneous  charges decreased by
$44,392  to  $27,396.  This  decrease  was offset by an  increase  in gains from
selling loans which increased to $127,095 from $102,758,  an increase of $24,337
or 23.7%. Other noninterest income items were comparable from year to year.

Noninterest  expense for the three month period  increased by $19,253 or 1.0% to
$1,948,547  from  $1,929,294  in the same period for the prior year.  Salary and
employee  benefits  increased by 6.3% to $1,129,326 from $1,062,869 for the same
period in the prior  year.  The  increase  was  attributable  to an  increase in
employees  and to increases  in average  salary  costs per  employee.  Occupancy
expense  increased  slightly  from  $167,527  to  $168,317,  an increase of .5%.
Advertising  declined  to

                                       9
<PAGE>

$63,734 from $72,544, a decline of $8,810 or 12.1%.  Advertising declined due to
a reduction in certain sales efforts.  Data processing  expense also declined to
$85,305  from a prior year total of  $103,523 a decline of $18,218 or 17.6%.  In
2002, certain  additional  expenses were incurred related to the planned systems
conversion  in June 2002.  Depreciation  of  furniture  fixtures  and  equipment
increased  to  $114,900  from the prior year total of  $43,999  an  increase  of
$70,901 or 161.1%. This increase was due to large investments in equipment added
during the prior year,  mostly  related to the  addition of new branches and new
equipment  added  for  the  2002  system  conversion.  Telephone  communications
declined  to  $39,076  from  $44,188 in the prior  year,  a decline of $5,112 or
11.6%.  This  decline was caused by cost control and  efficiency  efforts by the
Bank. The provision for valuation  allowances on foreclosed real estate declined
from $20,000 as of March 31, 2002 to nothing in 2003 as no further  increases to
the  valuation  allowance  were  considered  necessarry.  ATM  related  expenses
increased by $7,969 to $58,480 for the period ending March 31, 2003, an increase
of 15.8% due to  higher  levels of  activity,  more  ATM's,  and  certain  price
increases by ATM service providers. Office supplies expense decreased to $23,465
from the prior year  amount of  $36,221,  a decline  of  $12,756 or 35.2%.  This
decline  was  caused by delays in the  ordering  of some types of  supplies  and
increased  activity  in the prior year due to  conversion  preparations.  Office
equipment  expenses  also  decreased to $45,342 from 2002's level of $59,662,  a
decrease of $14,320 or 24.0%.  This  decrease  was caused by the  retirement  of
certain equipment due to the systems conversion in 2002. Other expenses declined
to $220,602  from  $288,250 a decline of $67,648 or 23.5%.  These  expenses were
lower based on certain cost control measures in 2003.  Income taxes decreased to
$350,000 or 35.3% of pretax  income in the current year  compared to $364,600 or
35.9% of pretax  income in the prior year.  The slight  decrease in the tax rate
was primarily attributable to an increase in certain tax exempt interest.

FINANCIAL CONDITION

Assets

Total assets as of March 31, 2003 increased by $11,630,047 to $293,803,742  from
the December 31, 2002 level of  $282,173,695.  Cash and due from banks increased
by  $1,534,309,  or 14.8%  from  December  31,  2002's  total.  Interest-bearing
deposits  with  banks  increased  by  $4,685,540  or 30.9%  during the period to
$19,865,391  at  March  31,  2003.  Investment  securities,  including  both the
available for sale and held to maturity  portfolios,  increased from $44,667,920
to $49,389,418 an increase of $4,721,498 or 10.6%.  Increases were primarily the
result  of  additional  purchases  of  investments  using the  proceeds  of loan
prepayments  and  the  conversion  of  certain   interest  bearing  deposits  to
investments.

The Bank's loan portfolio decreased by $6,488,224 or 3.3% during the three month
period  ending  March 31, 2003 to  $190,961,058  from  December  2002's total of
$197,449,282.  The decrease was  primarily  the result of large  amounts of loan
prepayments on the Bank's existing  residential  first mortgage  portfolio.  The
Bank did increase its  portfolio  of  commercial  real estate loans in the three
month period ending March 31, 2003,  but these  increases  were smaller than the
decreases  in other  parts of the loan  portfolio.  At March 31, 2003 the Bank's
allowance  for loan  losses  totals  $2,319,460  or 1.20%  of loan  balances  as
compared  to  $2,314,074  or  1.15%  of loan  balances  at  December  31,  2002.
Management's  determination  of the  adequacy  of the  allowance  is  based on a
periodic  evaluation of the portfolio  with  consideration  given to the overall
loss experience;  current economic conditions; volume, growth and composition of
the loan  portfolio;  financial  condition of the borrowers;  and other relevant
factors that, in  management's  judgment,  warrant  recognition  in providing an
adequate allowance.  Management  believes that the allowance is adequate.  Loans
held for sale  increased to  $2,683,680  from  $1,262,667  at December 31, 2001.
Additional  loan  information  for prior years is presented in the Form 10-k for
the year ended December 31, 2002:

                                       10
<PAGE>
<TABLE>
<CAPTION>
LOAN PORTFOLIO                                                  March 31,                          December 31,
                                                                  2003                                2002
                                                   ---------------------------          ---------------------------
                                                        Amount              %                Amount             %
<S>                                                 <C>                  <C>            <C>                  <C>
Real Estate Loans
  Commercial                                        $ 77,609,375         40.03%         $ 74,291,593         37.07%
  Residential first mortgage                          41,961,436         21.64%           48,975,989         24.44%
  Construction and land development                   13,670,041          7.05%           14,578,702          7.27%
  Home equity and second mortgage                     19,245,247          9.93%           19,007,265          9.48%
Commercial loans                                      36,902,643         19.03%           38,953,965         19.44%
Consumer loans                                         4,501,144          2.32%            4,623,447          2.31%
                                                    ------------        ------          ------------        ------
    Total loans                                      193,889,886        100.00%          200,430,961        100.00%
  Less:  Deferred loan fees                              609,368          0.31%              667,605          0.33%
         Allowance for loan losses                     2,319,460          1.20%            2,314,074          1.15%
                                                    ------------        ------          ------------        ------
    Loans receivable net                            $190,961,058                        $197,449,282
                                                    ------------                        ------------
</TABLE>
<TABLE>
<CAPTION>
LOAN LOSS ALLOWANCE
                                                   3 Months Ended                      3 Months Ended
                                                   March 31, 2003                      March 31, 2002
                                                   --------------                      --------------
<S>                                                  <C>                                 <C>
Beginning Balance                                    $ 2,314,074                         $ 2,281,581
Charge Offs                                                   --                             (24,922)
Recoveries                                                    --                                 600
                                                     -----------                         -----------
Net Charge offs                                               --                             (24,322)
Additions charged to operations                            5,386                              70,000
                                                     -----------                         -----------
Balance at end of period                             $ 2,319,460                         $ 2,327,259
                                                     ===========                         ===========

Ratio of net charge-offs during the period to
loans                                                      0.00%                               0.01%
                                                           ====                                ====
</TABLE>
<TABLE>
<CAPTION>
                                                          Balances as of         Balances as of
                                                          March 31, 2003        December 31, 2002
<S>                                                         <C>                     <C>
Restructured Loans                                          $      --               $      --
                                                            ---------               ---------

Accruing loans which are contracturally
past due 90 days or more:                                   $ 573,207               $ 596,579
                                                            ---------               ---------
Loans accounted for on a nonaccrual basis                   $      --               $      --
                                                            ---------               ---------

Total non- performing loans                                 $ 573,207               $ 596,579

Non -performing loans to total loans                            0.30%                   0.30%
                                                                ====                    ====
Allowance for loan losses to non performing loans             404.65%                 387.76%
                                                              ======                  ======
</TABLE>


                                       11
<PAGE>

Premises and equipment  decreased due to  depreciation  in the current  quarter.
Foreclosed  real estate  declined to $706,014 at March 31, 2003 from $716,014 at
December  31,  2002 due to partial  settlement  of one  property.  Other  assets
increased to $8,921,260  from $3,025,431 at December 31, 2002. This increase was
primarily the result of the Bank investing  $5,000,000 in certain life insurance
instruments which will provide  supplemental  benefits to certain key executives
and provide additional interest income to the Bank.

Liabilities

Deposit  balances  increased  by  $8,115,947  or 4.0% for the three months ended
March 31, 2003.  This  increase  was  primarily  in interest  bearing  deposits.
Management  believes that ongoing stock market volatility has made bank deposits
more attractive to the general public.  Short term borrowings remain at very low
levels,  $155,647. Long term debt increased to $53,074,408 at March 31 2003 from
$48,170,000  at December 31, 2002.  Management has increased long term borrowing
because  additional long term borrowing would help to stabilize interest expense
if interest rates were to increase dramatically.  Other liabilities decreased to
$2,262,780 at March 31, 2003 from $3,353,520 at December 31, 2002, a decrease of
32.5%.

Stockholders' Equity

Stockholders'  equity  increased  $297,083 or 1.11% to  $27,169,848 at March 31,
2003 compared to $26,872,765 at December 31, 2002.  This reflects the net income
of $641,111 for the three month period  partially offset by the $359,053 decline
in accumulated other comprehensive income. Other changes in equity occurred as a
result of using $108,593 to purchase  shares in the open market and retire them,
the  exercise of stock  options of  $31,158,  and  activity  related to the ESOP
shares of $92,459. Book value on a per share basis, $35.64 at March 31, 2003, as
compared to $35.37 at December 31, 2002, reflects a .8% increase,  with a slight
increase in outstanding shares, partially offsetting the gains noted previously.

LIQUIDITY AND CAPITAL RESOURCES

The Company  currently has no business  other than that of the Bank and does not
currently have any material funding commitments. The Company's principal sources
of liquidity are cash on hand and dividends  received from the Bank. The Bank is
subject to various regulatory restrictions on the payment of dividends.

The Bank's  principal  sources of funds for  investments  and operations are net
income,  deposits from its primary market area,  principal and interest payments
on loans,  interest received on investment securities and proceeds from maturing
investment securities. Its principal funding commitments are for the origination
or  purchase  of loans  and the  payment  of  maturing  deposits.  Deposits  are
considered  a  primary  source  of  funds  supporting  the  Bank's  lending  and
investment activities.

The Bank's most liquid assets are cash and cash  equivalents,  which are cash on
hand,  amounts due from  financial  institutions,  federal funds sold, and money
market  mutual  funds.  The levels of such  assets are  dependent  on the Bank's
operating financing and investment  activities at any given time. The variations
in levels of cash and cash  equivalents  are  influenced  by  deposit  flows and
anticipated future deposit flows.

The Bank may borrow up to 45% of  consolidated  Bank assets on a line  available
from the FHLB. As of March 31,2003 , the maximum available under this line would
be $132 million,  while current  outstanding  advances  totaled $53 million.  In
order to draw on this line the Bank must have sufficient collateral.  Qualifying
collateral includes  residential 1-4 family first mortgage loans, certain second
mortgage loans,  certain  commercial real estate loans,  and various  investment
securities.


REGULATORY MATTERS

The Bank is subject to Federal  Reserve  Board capital  requirements  as well as
statutory  capital  requirements  imposed under Maryland law. At March 31, 2003,
the Bank's tangible,  leverage and risk-based  capital ratios were 9.08%,  9.08%
and 13.11%, respectively.  These levels are well in excess of the required 4.0%,
4.0% and 8.0% ratios required by the Federal Reserve Board.

CRITICAL ACCOUNTING POLICIES

The Company's  financial  statements are prepared in accordance  with accounting
principles  generally  accepted  in the  United  States of America  (GAAP).  The
financial  information  contained  within  the  financial  statements  is,  to a
significant extent, financial information that is based on measures of financial
effects of  transactions  and events that have  already  occurred.  A variety of
factors could affect the ultimate value that is obtained when earning of income,
recognizing  an expense,  recovering  an asset or relieving a liability.  We use
historical  loss factors as one in  determining  the  inherent  loss that may be
present in

                                       12
<PAGE>

our loan portfolio. Actual losses could differ significantly from the historical
factors  that we use.  In addition  GAAP  itself may change from one  previously
acceptable method to another method.  Although the economics of our transactions
would be the same, the timing of events that would impact our transactions could
change.

The Company considers the allowance for loan losses to be a critical  accounting
policy.  The  allowance for loan losses is an estimate of the losses that may be
sustained in our loan portfolio.  The allowance is based on two basic principles
of accounting : (1) SFAS 5, "Accounting for Contingencies",  which requires that
losses be accrued when they are probable of occurring and estimable and (2) SFAS
114,  "Accounting  by Creditors for  Impairment of a Loan",  which requires that
losses be accrued  based on the  differences  between  the value of  collateral,
present  value of  future  cash  flows or  values  that  are  observable  in the
secondary market and the loan balance.

Management has  significant  discretion in making the judgments  inherent in the
determination  of the  provision  and  allowance  for loan losses,  including in
connection  with  the  valuation  of  collateral,   a  borrower's  prospects  of
repayment,  and in establishing allowance factors on the formula allowance.  The
establishment  of  allowance  factors  is  a  continuing   exercise,   based  on
management's  continuing assessment of the global factors such as delinquencies,
loss  history,  trends  in the  volume  and term of  loans,  national  and local
economic  trends,  concentration  of  credit,  loan  classification,  and  other
factors. Changes in allowance factors will have a direct impact on the amount of
the provision and a corresponding  effect on net income.  Errors in management's
perception  and  assessment  of the  global  factors  and  their  impact  on the
portfolio  could result in the allowance  not being  adequate to cover losses in
the portfolio, and may result in additional provisions or chargeoffs.

                                       13
<PAGE>

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.


ITEM 4 CONTROLS AND PROCEDURES

     The Company's  Chief  Executive  Officer and Chief  Financial  Officer have
evaluated  the Company's  disclosure  controls and  procedures  (as such term is
defined in Rule 13a-14(c) under the Exchange Act) as of a date within 90 days of
the date of filing of this Form 10-Q. Based upon such evaluation,  the Company's
Chief  Executive  Officer and Chief  Financial  Officer have concluded that such
controls and procedures are effective to ensure that the information required to
be  disclosed  by the Company in the reports it files under the  Exchange Act is
gathered, analyzed and disclosed with adequate timeliness.

     There have been no significant  changes in the Company's  internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of the evaluation described above.


                                       14
<PAGE>

                        TRI-COUNTY FINANCIAL CORPORATION
                        --------------------------------

                           PART II - OTHER INFORMATION
                           ---------------------------


Item 6 - Exhibits and reports on Form 8-K


     A.   Exhibits- The following exhibits are being filed with this Form 10-Q

               99.1  Certification  pursuant  to Section  906 of the  Sarbanes -
               Oxley Act of 2002


                                       15
<PAGE>
                                   SIGNATURES





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




                                       Tri-County Financial Corporation:



Date:May 15, 2003                      By:/s/ Michael L. Middleton
                                          -------------------------------------
                                          Michael L. Middleton, President
                                          and Chairman of the Board





Date:May 15, 2003                      By:/s/ William J. Pasenelli
                                          -------------------------------------
                                          William J. Pasenelli, Executive
                                          Vice President and Chief
                                          Financial Officer

                                       16
<PAGE>

                                  CERTIFICATION


I, Michael L.  Middleton,  President and Chief  Executive  Officer of Tri-County
Financial Corporation, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Tri-County  Financial
Corporation;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
the  registrant's  board or  directors  (or persons  fulfilling  the  equivalent
functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: May 15, 2003


                                         /s/ Michael L. Middleton
                                         -------------------------------------
                                         Michael L. Middleton
                                         President and Chief Executive Officer

                                       17
<PAGE>

                                  CERTIFICATION


I, William J. Pasenelli, Executive Vice President, Treasurer and Chief Financial
Officer of Tri-County Financial Corporation, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Tri-County  Financial
Corporation;


2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;


3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;


4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

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

     (b)  Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
the  registrant's  board or  directors  (or persons  fulfilling  the  equivalent
functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: May 15, 2003



                            /s/ William J. Pasenelli
                            ----------------------------------------------------
                            William J. Pasenelli
                            Executive Vice President and Chief Financial Officer


                                       18