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 June 30, 2002

                                       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)

                                      N/A
              ----------------------------------------------------
              (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 the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practical date.

     As of August 2, 2002  registrant had  outstanding  768,442 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 - June 30, 2002
       and December 31, 2001                                              3

     Consolidated Statements of Income and Comprehensive Income -
       Three And Six Months Ended June 30, 2002 and 2001                  4

     Consolidated Statements of Cash Flows - Six Months
       Ended June 30, 2002 and 2001                                       5 - 6

     Notes to Consolidated Financial Statements                           7

Item 2- Management's Discussion and Analysis of Financial Condition
       and Results of Operations                                          8 - 12

Item 3 - Quantitative and Qualitative Disclosure about Market Risk        12

PART II - OTHER INFORMATION
Item 4  - Submission of Matters to Vote of Security Holders               13
Item 6 - Exhibits and Reports on Form 8-K                                 13


SIGNATURES                                                                14


                                       2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS (UNAUDITED)
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS JUNE 30, 2002 AND DECEMBER 31, 2001
<TABLE>
<CAPTION>

                                                      ASSETS
                                                                                  June 30, 2002     December 31, 2001
<S>                                                                                <C>                   <C>
Cash and due from banks                                                            $ 4,462,642           $ 693,439
Interest-bearing deposits with banks                                                 8,290,165           7,678,158
Investment securities available for sale - at fair value                            43,408,248          41,673,742
Investment securities held to maturity - at amortized cost                           2,651,475           2,289,354
Stock in Federal Home Loan Bank and Federal Reserve Bank - at cost                   3,035,550           3,035,550
Loans held for sale                                                                         --           2,354,315
Loans receivable - net of allowance for loan losses
of $2,278,393 and $2,281,581, respectively                                         197,084,743         193,450,011
Premises and equipment, net                                                          6,137,109           5,432,848
Foreclosed real estate                                                                 740,452           1,800,569
Accrued interest receivable                                                          1,179,219           1,049,401
Other assets                                                                         3,407,136           2,499,903
                                                                                 -------------       -------------
Total assets                                                                     $ 270,396,739       $ 261,957,290
                                                                                 =============       =============
                                       LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Noninterest-bearing deposits                                                      $ 24,100,981        $ 17,738,165
Interest-bearing deposits                                                          169,484,639         165,378,369
                                                                                 -------------       -------------
Total deposits                                                                     193,585,620         183,116,534
Short-term borrowings                                                                  695,893           1,813,317
Long-term debt                                                                      47,250,000          48,650,000
Accrued expenses and other liabilities                                               3,225,560           2,790,981
                                                                                 -------------       -------------
Total liabilities                                                                  244,757,073         236,370,832
                                                                                 -------------       -------------
STOCKHOLDERS' EQUITY:
Common stock - par value $.01; authorized - 15,000,000 shares;
issued 762,541 and 756,805 shares, respectively                                          7,625               7,568
Surplus                                                                              7,595,614           7,545,590
Retained earnings                                                                   17,652,938          17,678,367
Accumulated other comprehensive income                                                 533,085             555,513
Unearned ESOP shares                                                                  (149,596)           (200,580)
                                                                                 -------------       -------------
Total stockholders' equity                                                          25,639,666          25,586,458
                                                                                 -------------       -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $ 270,396,739       $ 261,957,290
                                                                                 =============       =============
</TABLE>

See notes to consolidated financial statements

                                       3
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                        JUNE 30,                       JUNE 30,
                                                            -----------------------------      --------------------------
                                                                2002              2001           2002             2001
<S>                                                         <C>               <C>              <C>            <C>
INTEREST INCOME:
   Interest and fees on loans                               $ 3,577,700       $ 3,819,797      $7,067,360     $ 7,630,070
   Taxable interest and dividends on investment
     securities                                                 603,868           807,156       1,258,565       1,883,307
   Interest on bank deposits                                     25,578            22,333          48,820          44,130
                                                            -----------       -----------      ----------     -----------
        Total interest revenues                               4,207,146         4,649,286       8,374,745       9,557,507
                                                            -----------       -----------      ----------     -----------
INTEREST EXPENSE:
   Interest on deposits                                         865,181         1,603,996       1,774,904       3,298,258
   Interest on long term debt                                   630,618           658,930       1,270,883       1,250,316
   Interest on other borrowings                                      --            53,775              --         255,346
                                                            -----------       -----------      ----------     -----------
        Total interest expenses                               1,495,799         2,316,701       3,045,787       4,803,920
                                                            -----------       -----------      ----------     -----------

NET INTEREST INCOME                                           2,711,347         2,332,585       5,328,958       4,753,587
PROVISION FOR LOAN LOSSES                                        30,000            90,000         100,000         180,000
                                                            -----------       -----------      ----------     -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES           2,681,347         2,242,585       5,228,958       4,573,587
                                                            -----------       -----------      ----------     -----------
NONINTEREST INCOME:
   Loan appraisal, credit, and miscellaneous charges             16,560            61,940          88,348          96,899
   Net gain on sale of loans held for sale                      105,224            60,867         207,982          84,735
   Service charges                                              267,027           224,540         485,369         496,693
   Other                                                          9,248             6,511          13,709          23,059
                                                            -----------       -----------      ----------     -----------
        Total noninterest income                                398,059           353,858         795,408         701,386
                                                            -----------       -----------      ----------     -----------
NONINTEREST EXPENSE:
   Salary and employee benefits                               1,035,309           879,437       2,098,178       1,839,732
   Occupancy expense                                            224,141           160,430         391,668         304,806
   Data processing expense                                      234,933            70,623         338,456         176,607
   Loss on disposal of obsolete equipment                        65,104                --          65,104              --
   Advertising                                                   90,422            65,718         162,966         112,880
   Equipment depreciation                                       177,197            63,301         221,196         116,686
   Telephone communications                                     149,192            26,885         193,380          60,397
   Valuation allowance on foreclosed real estate              1,044,070                --       1,044,070              --
   Other                                                        436,694           342,710         871,338         679,745
                                                            -----------       -----------      ----------     -----------
        Total noninterest expenses                            3,457,062         1,609,104       5,386,356       3,290,853
                                                            -----------       -----------      ----------     -----------

INCOME (LOSS) BEFORE INCOME TAXE EXPENSE (BENEFIT)             (377,656)          987,339         638,010       1,984,120
INCOME TAX  EXPENSE (BENEFIT)                                  (134,600)          335,700         230,000         683,700
                                                            -----------       -----------      ----------     -----------
NET INCOME (LOSS)                                              (243,056)          651,639         408,010       1,300,420

OTHER COMPREHENSIVE INCOME, NET OF TAX
 Net unrealized holding gains (losses) arising
 during the period                                              135,220           (42,181)        (22,428)        409,047
                                                            -----------       -----------      ----------     -----------
</TABLE>

                                       4
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                                        SIX MONTHS ENDED
                                                                                            JUNE 30,
                                                                                  ----------------------------
                                                                                    2002               2001
<S>                                                                               <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                      $   408,010        $ 1,300,420

Adjustments to reconcile net income to net
   cash (used) provided by operating activities:
   Valuation allowance on foreclosed real estate                                  1,044,070                 --
   Provision for loan losses                                                        100,000            180,000
   Depreciation and amortization                                                    246,092            165,100
   Loss on disposal of obsolete equipment                                            65,104                 --
   Net amortization of premium/discount on investment securities                      7,401             24,553
   Deferred income tax benefit                                                      (90,000)          (109,000)
   (Increase) decrease in accrued interest receivable                              (129,818)            34,406
   Increase (decrease) in deferred loan fees                                         16,173            (22,498)
   Decrease in accounts payable, accrued expenses,
     and other liabilities                                                          434,579             23,894
   Increase in other assets                                                      (1,099,337)          (457,134)
   Gain on disposal of premises and equipment                                        (4,458)            (8,386)
   Origination of loans held for sale                                            (9,908,946)        (4,582,681)
   Gain on sales of loans held for sale                                            (207,982)           (84,735)
   Proceeds from sale of loans held for sale                                      8,485,893          5,292,265
                                                                                -----------        -----------
          Net cash (used) provided by operating activities                         (633,219)         1,756,204
                                                                                -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net increase in interest-bearing deposits with banks                            (612,007)          (129,834)
   Purchase of investment securities available for sale                         (26,341,167)       (11,504,288)
   Proceeds from sale, redemption or principal payments
    of investment securities available for sale                                  24,565,938         18,526,965
   Purchase of investment securities held to maturity                            (1,201,212)          (100,000)
   Proceeds from maturities or principal payments
    of investment securities held to maturity                                       839,091            414,200
   Loans originated or acquired                                                 (42,594,970)       (43,938,943)
   Principal collected on loans                                                  42,829,415         29,052,799
   Proceeds from disposal of premises and equipment                                  13,000              8,963
   Purchase of premises and equipment                                            (1,023,999)          (299,077)
   Proceeds from foreclosed real estate                                             309,046                 --
                                                                                -----------        -----------
       Net cash provided (used) in investing activities                          (3,216,865)        (7,969,215)
                                                                                -----------        -----------
</TABLE>


                                       5
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                                       SIX MONTHS ENDED
                                                                                           JUNE 30,
                                                                                ------------------------------
                                                                                   2002               2001
<S>                                                                             <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net (decrease) increase in deposits                                         $ 10,469,086       $ 10,550,232
   Proceeds from long-term borrowings                                                    --         10,250,000
   Payments of long-term borrowings                                              (1,400,000)        (5,000,000)
   Net decrease in other borrowed funds                                          (1,117,424)        (8,391,087)
   Exercise of stock options                                                         39,629             31,817
   Net change in unearned ESOP shares                                                61,452             49,967
   Dividends paid                                                                  (385,129)          (309,204)
   Redemption of common stock                                                       (48,327)          (446,217)
                                                                                -----------        -----------

      Net cash provided by financing activities                                   7,619,287          6,735,508
                                                                                -----------        -----------

INCREASE IN CASH AND CASH EQUIVALENTS                                             3,769,203            522,497

CASH AND CASH EQUIVALENTS - JANUARY 1                                               693,439            645,817

CASH AND CASH EQUIVALENTS - JUNE 30                                             $ 4,462,642        $ 1,168,314
                                                                                ===========        ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the six months for:
Interest                                                                        $ 3,241,936        $ 4,827,084
                                                                                ===========        ===========

Income taxes                                                                    $ 1,040,000        $   896,000
                                                                                ===========        ===========
</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.
     The results of operations  for the three and six months ended June 30, 2002
     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 2002 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, 2001.

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:
<TABLE>
<CAPTION>
                                 SIX MONTHS ENDED           THREE MONTHS ENDED
                                     JUNE 30,                    JUNE 30,
                               -------------------------------------------------
                                 2002          2001          2002        2001
<S>                            <C>           <C>           <C>           <C>
Basic                          760,790       775,317       762,721       771,994
Diluted                        792,699       806,309       762,721       802,202

</TABLE>

                                       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.

In the last several  quarters,  the national economy has recovered slowly 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.

In the  current  quarter,  the Bank has  established  a valuation  allowance  on
certain  foreclosed  real estate based on indications  that the market value was
below carrying value. This valuation allowance approximately $1.0 million pretax
and $670 thousand  after taxes.  The effect of these write downs was to decrease
basic and fully  diluted  earnings per share for the six months  ending June 30,
2002 by $.88 and $.84  respectively.  For a discussion of the Bank's  accounting
policies  regarding the accounting for foreclosed real estate, see Note 1 to the
Company's  Consolidated  Financial  Statements  for the year ended  December 31,
2001.

In the current quarter,  the Bank also incurred significant costs related to its
conversion to a new provider of data processing  services.  These costs included
payments  made to the previous  vendor for  conversion  related  work  including
facilitating  the  transfer  of customer  data to the new system,  costs for the
production of certain reports and other items. Other conversion related expenses
included employee training,  system  installation,  and the write off of certain
incompatible  equipment.  Total


                                       8
<PAGE>

costs  related to the data  conversion  in the quarter were  approximately  $805
thousand. Of this amount,  approximately $415 thousand was expensed in the first
six months of 2002.  These  additional  costs reduced earnings per share by $.35
and $.33 per  share on a basic  and  fully  diluted  basis  respectively.  For a
summary of costs  incurred  and  results  affected  by the write downs and other
additional expenses see the table below:
<TABLE>
<CAPTION>
                                                                                         Effect of         Pro-forma
                                                      Income               Effect        write down       income from
                                                      as reported        of systems     of foreclosed     continuing
                                                      under GAAP         conversion      real estate      operations
<S>                                                    <C>               <C>             <C>              <C>
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES                                       $5,228,958         $       -       $         -     $5,228,958

NONINTEREST INCOME:                                      795,408                 -                 -        795,408

NONINTEREST EXPENSE:
   Salary and employee benefits                        2,098,178                 -                 -      2,098,178
   Occupancy expense                                     391,668                 -                 -        391,668
   Data processing expense                               338,456           142,553                 -        195,903
   Loss on disposal of obsolete equipment                 65,104            65,104                 -              -
   Advertising                                           162,966                 -                 -        162,966
   Equipment depreciation                                221,196            60,000                 -        161,196
   Telephone communications                              193,380           101,365                 -         92,015
   Valuation allowance on  foreclosed real estate      1,044,070                 -         1,044,070              -
   Other                                                 871,338            46,034                 -        825,304
                                                     -----------        ----------       -----------     ----------
        Total noninterest expenses                     5,386,356           415,056         1,044,070      3,927,230

INCOME (LOSS) BEFORE INCOME TAXES                        638,010          (415,056)       (1,044,070)     2,097,136
INCOME TAX EXPENSE (BENEFIT)                             230,000          (149,626)         (376,383)       756,009
NET INCOME (LOSS)                                        408,010          (265,430)         (667,687)     1,341,127

EARNINGS (LOSS) PER SHARE
   Basic                                                  $ 0.54           $ (0.35)          $ (0.88)        $ 1.77
   Diluted                                                $ 0.51           $ (0.33)          $ (0.84)        $ 1.69

Equipment and software acquired                                -           310,519                 -              -
</TABLE>

On April 28, 2002, a tornado  caused damages to property in our market area. The
Company `s facilities  suffered no damage,  and we are not aware of any customer
who  suffered   material  losses  which  would  affect  their  ability  to  meet
obligations to repay loans. We do not believe that the storm will cause material
long term economic damage to our market area.

In the last several  years,  the Bank has increased  its sources of  noninterest
income through fees gathered on transactional  accounts, the sale of non-deposit
products  including  investments,  and  continued  operation of our  residential
mortgage  operation.  These fees have  continued  to grow over the last  several
quarters,  while the Bank's fee income  from the  residential  mortgage  lending
business has decreased due to the Bank's shift in lending  emphasis.  Management
believes that the Bank's strong local focus and responsiveness to customers will
enable it to increase its fee income over time.

                                       9
<PAGE>

SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                                                  SIX MONTHS ENDED
                                                                                      JUNE 30,
                                                                               --------------------------
                                                                                 2002           2001
<S>                                                                            <C>            <C>
Condensed Income Statement
Interest Income                                                                $ 8,374,745    $ 9,557,507
Interest Expense                                                                 3,045,787      4,803,920
Net Interest Income                                                              5,328,958      4,753,587
Provision for Loan Loss                                                            100,000        180,000
Noninterest Income                                                                 795,408        701,386
Noninterest Expense                                                              5,386,356      3,290,853
Income Before Income Taxes                                                         638,010      1,984,120
Income Taxes                                                                       230,000        683,700
Net Income                                                                         408,010      1,300,420


Per Common Share
Basic Earnings                                                                      $ 0.54         $ 1.68
Diluted Earnings                                                                      0.51           1.61
Book Value                                                                           33.62          31.90
</TABLE>


RESULTS OF OPERATIONS

Net income for the six month period ended June 30, 2002 totaled  $408,010  ($.54
basic and $.51  fully  diluted  earnings  per  share)  compared  with a total of
$1,300,420 ($1.68 basic and $1.61 fully diluted earnings per share) for the same
period in the prior year.  This  decrease  of $892  thousand or 68.7% was caused
primarily by additional  expenses incurred by the Company in the current quarter
relating to the systems conversion and the valuation  allowance  established for
certain foreclosed real estate as noted previously. The combined effect of these
events was to decrease  pretax income in the current quarter by $1.5 million and
after tax income by approximately $1 million.

For the six month period ended June 30, 2002,  interest  income declined by $1.2
million or 12.4% to $8.4  million.  This  decline  was  caused by the  continued
decline in interest  rates  particularly  the  declines  in the Prime,  and one,
three,  and five year  treasury  rates.  Many of the  Bank's  lending  products'
pricing are based on these rates.  This decline in interest  rates was partially
offset by higher average asset balances.

Interest  expense also  decreased to $3.0 million in the period  ending June 30,
2002 as compared to $4.8 million in the same period in the prior year a decrease
of $1.8 million or 36.6%. As with the change in interest  income,  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 interest expense declined
faster than its interest  income because the Bank was able to  aggressively  cut
funding costs by repricing certain of its deposit products.  Further declines in
interest  rates  would  probably  not lead to  similar  results  as the Bank has
decreased  interest rates on certain products to extremely low levels.  The Bank
is attempting to protect its interest rate position in the event of increases in
interest rates by lengthening,  to the extent  possible,  average  maturities on
liabilities and adding interest rate sensitive loans.

Provision for loan losses  declined from prior year levels to $100 thousand from
$180  thousand  for the periods  ending  June 30,  2002 and 2001,  respectively.
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  increased to $795  thousand for the six month period ending
June 30, 2002, an increase of $94 thousand or 13.4% over the prior year total of
$701 thousand.  Increased income was primarily the result of a large increase in
gains on selling  mortgage loans,  which increased by $123 thousand or 145.5% to
$208 thousand in the current  period.  This large gain offset small  declines in
other areas of noninterest income.

Noninterest  expense for the six month period increased by $2.1 million or 63.7%
to $5.4 million from $3.3 million in the same period for the prior year.  Salary
and employee benefits  increased by 14.1% to $2.1 million from $1.8 for the same


                                       10
<PAGE>

period in the prior  year.  The  increase  was  attributable  to an  increase in
employees and to increases in average salary costs per employee. The increase in
occupancy expense was caused by larger amounts of repairs and maintenance at the
Bank's branch locations as well as the opening of the Bank's permanent  facility
at Charlotte Hall. Data  processing  expense  increased by $162 thousand to $338
thousand or an increase of 91.6%.  This  increase was the result of fees paid to
the former data processing  provider for conversion related services,  fees paid
to the new provider for system installation,  configuration,  and training,  and
for payments to both  providers  for a short  period  (about 6 weeks) where both
providers  provided basic monthly  services.  In 2002, the Bank also disposed of
certain computer  equipment which was incompatible  with the new data processing
system.  Advertising expense increased by $50 thousand or 44.4% primarily due to
increased  marketing  efforts  related to various  transaction  based  accounts.
Depreciation  increased to $221 thousand increasing by 89.6% over the prior year
level of $117 thousand.  The increase was primarily due to the  obsolescence  of
computer and other equipment  incompatible with the new data processing  system.
Expenses related to telephone communications also increased to $193 thousand for
the six months  ended June 30, 2002 from $60  thousand in the same period in the
prior year, an increase of 220%. This increase was primarily related to the data
conversion.  As noted above,  for the six months  ended June 30, 2002,  the Bank
established  a valuation  allowance on  foreclosed  assets in the amount of $1.0
million.  In 2001,  there were no  expenses  in this  category.  Other  expenses
increased by $191  thousand to $871  thousand  from the prior year total of $679
thousand, an increase of 28.2%.

Income taxes decreased to $230 thousand or 36.1% of pretax income in the current
year compared to $684 thousand or 34.5% of pretax income in the prior year.  The
increase in the tax rate was primarily  attributable to an increase in the state
income tax burden. In the prior period, taxes were substantially reduced because
income earned on investment securities held by the Bank's investment corporation
subsidiary,  Tri-County  Investment  Corporation ("TCIC") was not subject to the
state income tax. In the current year, reductions in the assets invested in TCIC
and a reduction in the overall yield on invested  assets have reduced the amount
of income sheltered from state income tax, increasing the effective tax rate.

RESULTS OF OPERATIONS -- SECOND QUARTER

The Company  recorded a net loss for the second quarter of 2002 of $243 thousand
compared  to net income for the second  quarter of 2001 of $652  thousand.  This
decline was the result of the factors noted above,  particularly  the write down
of  foreclosed  properties  and the expenses  incurred as the result of the data
processing  conversion.  These costs offset higher net interest and  noninterest
income.  Interest income declined by 9.5% to $4.2 million in the current quarter
from $4.6  million in the prior year.  Interest  expense  also  declined to $1.5
million  from $2.3  million in the prior year,  a decline of 35.4%.  The factors
noted in the declines  for the six month  period  ending June 30, 2002 were also
present including a decline in the overall rate environment, increased levels of
non interest bearing deposits,  and aggressive  repricing of certain deposits by
the Bank.

Net interest  income  increased by $379 thousand or 16.2%.  Non-interest  income
increased  by $44 thousand or 12.5% in the second  quarter of 2002,  compared to
the second quarter of 2001.  This increase was the result of increases in income
from service charges,  increased gains on selling residential mortgage loans and
was offset by declines  in loan  service  charges.  Total  non-interest  expense
increased by $1.8 million or 114.8% for the second quarter  compared to the same
period last year primarily due to an increase in costs related to the write down
of real estate values noted above and the  conversion  related costs incurred in
the current quarter.  Salary and benefits  expense  increased by 17.7% due to an
increased  number of employees  and higher  benefits  costs.  Occupancy  expense
increased  due to the opening of a permanent  full service  branch.  Advertising
expenses  also  increased due to a higher level of  advertising  activity in the
second  quarter,  primarily  related  to  efforts  to  increase  the  amount  of
transaction  account  balances.  Depreciation  increased due to the write off of
computer  equipment  incompatible  with the new data  processing  system.  Other
expenses  increased  primarily  due to the write offs noted  above.  The Company
recorded a net basic and fully diluted net loss per share of $.32 in the current
quarter as opposed to net basic  earnings per share of $.84 and a fully  diluted
earnings per share of $.81 in the prior year.

FINANCIAL CONDITION

Assets

Total assets as of June 30, 2002  increased  by $8.4  million to $270.4  million
from the  December  31,  2001  level of $262  million.  Cash and due from  banks
increased  by  $3.8   million,   or  544%  from   December  31,   2001's  total.
Interest-bearing  deposits with banks  increased by $612 thousand or 8.0% during
the quarter to $8.3 million at June 30, 2002. Investment  securities,  including
both the  available  for sale and held to maturity  portfolios,  increased  from
$44.0  million to $46.1  million an increase of $2.1 million or 4.8%.  Increases
were  primarily  the result of  additional  purchases of  investments  using the
proceeds  of loan  prepayments.  The Bank's  loan  portfolio  increased  by $3.6
million or 1.9% during the six month period ending June 30, 2002 to $197 million
from  December  2001's total of $193  million.  The increase was  primarily  the
result of  increases in the  Commercial,  Commercial  Real Estate,  and Consumer
portfolios which offset declines in the Residential First Mortgage portfolio. At
June 30, 2002 the Bank's  allowance for loan losses totals $2.3 million or 1.16%
of loan  balances  as

                                       11
<PAGE>

compared  to $2.3  million  or 1.18% of loan  balances  at  December  31,  2001.
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 decline to $0 from $2.3 million at December 31, 2001. Premises and
equipment increased due to equipment  replacement needed for the data processing
conversion as well as construction costs related to the permanent Charlotte Hall
facility.  Foreclosed  real  estate  declined  due to the  establishment  of the
valuation allowance noted above.

Liabilities

Deposit  balances  increased  by $10.5  million or 5.7% for the six months ended
June 30, 2002.  This increase was  primarily in  noninterest  bearing  deposits.
Management  believes that the recent stock market  volatility may help marketing
efforts.  Short term borrowings remain at very low levels,  $695 thousand.  Long
term debt declined slightly to $47.2 million at June 30, 2002 from $48.7 million
at December 31, 2001.  Other  liabilities  increased to $3.2 million at June 30,
2002 from $2.8 million at December 31, 2001, an increase of 15.6%.

Stockholders' Equity

Stockholders'  equity increased $53 thousand or .2% to $25.6 million at June 30,
2002  compared to $25.6  million at December  31,  2001.  This  reflects the net
income of $408,010 for the six month period  partially offset by the $385,129 in
cash dividends.  Accumulated  other  comprehensive  income decreased by $22,428.
Other changes in equity occurred as a result of using $48,328 to purchase shares
in the open market and retire them,  the  exercise of stock  options of $39,629,
and a change in  unearned  ESOP  shares of  $61,452.  Book  value on a per share
basis,  $33.62 at June 30,  2002,  as compared to $33.80 at December  31,  2001,
reflects a .5% decrease, reflecting the slight increase in outstanding shares.

As  noted  on Form 8K filed on July 25,  2002  the  Board  has  approved  of the
purchase of up to 38,000 shares of the Company's stock, for retirement.  For the
six months ended June 30, 2002, the Company purchased 1,665 shares for $48,310.

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 40% of  consolidated  Bank assets on a line  available
from the FHLB. As of June 30, 2002, the maximum  available under this line would
be $109 million,  while current  outstanding  advances totaled $48.7 million. In
order to draw on this line the Bank must have sufficient collateral.  Qualifying
collateral  includes  residential  1-4 family first  mortgage  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 June 30, 2002, the
Bank's tangible,  leverage and risk-based  capital ratios were 8.71%,  9.96% and
12.68%, respectively. These levels are well in excess of the required 4.0%, 4.0%
and 8.0% ratios required by the Federal Reserve Board.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable.

                                       12
<PAGE>

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

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

Item 4 - Submission of Matters to a Vote of Security Holders

On May 8, 2002,  the Company held its Annual Meeting of  Shareholders.  The only
matter  voted on was the  election  of two  directors.  Set forth  below are the
results of the voting in the election of directors.

  Nominee                        For                               Against
  -------                        ---                               -------
  W. Edelen Gough                509,861                            1,116
  H. Beaman Smith                488,856                           22,121

There were no broker  non-votes.  The terms of  directors  Catherine  A.  Askey,
Michael L.  Middleton,  C. Marie  Brown,  Louis P.  Jenkins,  Jr. and Herbert N.
Redmond continued after the meeting.


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

     B.   During  the  quarter  for which  this Form  10-Q is being  filed,  the
          registrant did not file any reports on Form 8-K.


                                       13
<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:  August 13, 2002                By: /s/ Michael L. Middleton
                                          --------------------------------------
                                          Michael L. Middleton, President
                                          and Chairman of the Board




Date:  August 13, 2002                By: /s/ William J. Pasenelli
                                          --------------------------------------
                                          William J. Pasenelli, Executive
                                          Vice President and Chief
                                          Financial Officer


                                       14