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, 2001

                                       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) 645-5601
            ---------------------------------------------------------
              (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 the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practical date.

     As of May 5,  2001  registrant  had  outstanding  772,756  shares of Common
Stock.
<PAGE>


TRI-COUNTY FINANCIAL CORPORATION

FORM 10-Q                                                                  INDEX
---------                                                                  -----

PART I - FINANCIAL INFORMATION                                             PAGE

   Item 1 - Financial Statements (Unaudited)

     Consolidated Balance Sheets - March 31, 2001
       and December 31, 2000                                                3

     Consolidated Statements of Income and Comprehensive Income -
       Three Months Ended March 31, 2001 and 2000                           4

     Consolidated Statements of Cash Flows - Three Months
       Ended March 31, 2001 and 2000                                       5-6

     Notes to Consolidated Financial Statements                             7

Item 2 - Management's Discussion and Analysis of Financial Condition
       and Results of Operations                                           8-11

Item 3 -  Quantitative and Qualitative Disclosure about Market Risk         11

PART II - OTHER INFORMATION                                                 12
   Item 6 - Exhibits and Reports on Form 8-K


SIGNATURES                                                                  13


                                       2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS (UNAUDITED)
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS MARCH 31, 2001 AND DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                   ASSETS
                                                                             March 31, 2001    December 31, 2000
<S>                                                                          <C>                 <C>
Cash and due from banks                                                      $  1,188,423        $    645,817
Interest-bearing deposits with banks                                            6,630,630           5,975,314
Investment securities available for sale - at fair value                       54,974,320          56,860,996
Investment securities held to maturity - at amortized cost                      1,497,509           1,714,367
Stock in Federal Home Loan Bank and Federal Reserve Bank - at cost              3,035,550           3,035,550
Loans held for sale                                                               349,550             355,000
Loans receivable - net of allowance for loan losses
of $2,022,460 and $1,929,531, respectively                                    181,850,964         172,090,088
Premises and equipment, net                                                     4,576,490           4,495,431
Foreclosed real estate                                                            176,626             176,626
Accrued interest receivable                                                     1,251,374           1,353,658
Other assets                                                                    1,871,471           1,636,609
                                                                             ------------        ------------

                                                                             $257,402,907        $248,339,456
                                                                             ============        ============
LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Noninterest-bearing deposits                                                 $ 13,094,880        $ 12,537,649
Interest-bearing deposits                                                     159,704,221         155,268,350
                                                                             ------------        ------------
Total deposits                                                                172,799,101         167,805,999
Short-term borrowings                                                          10,774,595          13,550,903
Long-term debt                                                                 46,650,000          41,400,000
Accrued expenses and other liabilities                                          2,686,275           2,152,732
                                                                             ------------        ------------

Total liabilities                                                             232,909,971         224,909,634
                                                                             ------------        ------------

STOCKHOLDERS' EQUITY:
Common stock - par value $.01; authorized - 15,000,000 shares;
issued 779,247 and 777,680 shares, respectively                                     7,792               7,777
Surplus                                                                         7,545,603           7,500,865
Retained earnings                                                              16,705,857          16,175,708
Accumulated other comprehensive income (loss)                                     336,299            (114,929)
Unearned ESOP shares                                                             (102,615)           (139,599)
                                                                             ------------        ------------
Total stockholders' equity                                                     24,492,936          23,429,822
                                                                             ------------        ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $257,402,907        $248,339,456
                                                                             ============        ============
</TABLE>

See notes to consolidated financial statements

                                       3
<PAGE>

TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED
                                                                                       MARCH 31,
                                                                              -----------------------------
                                                                                  2001              2000
<S>                                                                           <C>               <C>
INTEREST INCOME:
   Interest and fees on loans                                                 $ 3,810,273       $ 3,264,905
   Taxable interest and dividends on investment securities                      1,076,151         1,050,049
   Interest on bank deposits                                                       21,797            20,294
                                                                              -----------       -----------
        Total interest revenues                                                 4,908,221         4,335,248
                                                                              -----------       -----------
INTEREST EXPENSE:
   Interest on deposits                                                         1,694,262         1,410,626
   Interest on long term debt                                                     201,571           299,712
   Interest on other borrowings                                                   591,386           337,783
                                                                              -----------       -----------
        Total interest expenses                                                 2,487,219         2,048,121
                                                                              -----------       -----------

NET INTEREST INCOME                                                             2,421,002         2,287,127
PROVISION FOR LOAN LOSSES                                                          90,000            90,000
                                                                              -----------       -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                             2,331,002         2,197,127
                                                                              -----------       -----------

NONINTEREST INCOME:
   Loan appraisal, credit, and miscellaneous charges                               34,959            15,692
   Net gain on sale of loans held for sale                                         23,868            39,142
   Service charges                                                                272,153           228,942
   Other                                                                           16,548             8,343
                                                                              -----------       -----------
        Total noninterest income                                                  347,528           292,119
                                                                              -----------       -----------

NONINTEREST EXPENSE:
   Salary and employee benefits                                                   960,295           889,901
   Occupancy expense                                                              144,376           158,673
   Deposit insurance and surety bond premiums                                       7,940             7,989
   Data processing expense                                                        105,984            91,384
   Advertising                                                                     47,162            43,752
   Depreciation                                                                    53,385            53,455
   Other                                                                          362,607           322,371
                                                                              -----------       -----------
        Total noninterest expenses                                              1,681,749         1,567,524
                                                                              -----------       -----------

INCOME BEFORE INCOME TAXES                                                        996,781           921,722
INCOME TAXES                                                                      348,000           300,000
                                                                              -----------       -----------
NET INCOME                                                                        648,781           621,722

OTHER COMPREHENSIVE INCOME, NET OF TAX
   Net unrealized holding gains (losses) arising during the period                451,228          (203,133)
                                                                              -----------       -----------
COMPREHENSIVE INCOME                                                          $ 1,100,009       $   418,589
                                                                              ===========       ===========

EARNINGS PER SHARE
   Basic                                                                              .83               .79
   Diluted                                                                            .80               .75
</TABLE>

See notes to consolidated financial statements


                                       4
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                    THREE MONTHS ENDED
                                                                                         MARCH 31,
                                                                             ------------------------------
                                                                                 2001              2000
<S>                                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                   $    648,781      $    621,722
Adjustments to reconcile net income to net
   cash provided by operating activities:
   Provision for loan losses                                                       90,000            90,000
   Depreciation and amortization                                                   77,550            77,350
   Net amortization of premium/discount on
   investment securities                                                           10,485           (12,896)
   Deferred income tax benefit                                                   (109,000)          (27,000)
   Decrease (increase) in accrued interest receivable                             102,284            (7,385)
   Decrease in deferred loan fees                                                  (4,734)          (59,365)
   Increase in accounts payable, accrued expenses,
   and other liabilities                                                          533,543           756,212
   (Increase) Decrease  in other assets                                          (359,777)          264,265
   Gain on disposal of premises and equipment                                      (8,386)                -
   Origination of loans held for sale                                            (840,450)       (1,374,774)
   Gain on sales of loans held for sale                                           (23,869)          (39,142)
   Proceeds from sale of loans held for sale                                      858,869         1,850,865
                                                                             ------------      ------------

          Net cash provided by operating activities                               975,296         2,139,852
                                                                             ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net increase in interest-bearing deposits with banks                          (655,316)       (1,467,348)
   Purchase of investment securities available for sale                        (6,543,175)       (3,181,024)
   Proceeds from sale, redemption or principal payments
    of investment securities available for sale                                 9,104,510         4,269,615
   Purchase of investment securities held to maturity                                   -          (200,000)
   Proceeds from maturities or principal payments
    of investment securities held to maturity                                     216,858           479,388
   Loans originated or acquired                                               (22,289,790)      (17,802,236)
   Principal collected on loans                                                12,454,548        11,724,776
   Proceeds from disposal of premises and equipment                                 8,963                 -
   Purchase of premises and equipment                                            (159,188)         (126,987)
   Acquisition of foreclosed real estate                                                -          (108,877)
   Purchase of FHLB and Federal Reserve stock                                           -          (150,000)
                                                                             ------------      ------------

       Net cash used in investing activities                                   (7,862,590)       (6,562,693)
                                                                             ------------      ------------
</TABLE>



                                       5
<PAGE>


TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS ENDED
                                                                                       MARCH 31,
                                                                              -----------------------------
                                                                                 2001              2000
<S>                                                                           <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net increase in deposits                                                   $ 4,993,102      $    821,259
   Proceeds from long-term borrowings                                          10,250,000                 -
   Payments of long-term borrowings                                            (5,000,000)      (10,000,000)
   Net (decrease) increase in short-term borrowings                            (2,776,308)       10,554,650
   Exercise of stock options                                                       31,817            35,980
   Net change in unearned ESOP shares                                              49,967            36,984
   Redemption of common stock                                                    (118,678)         (137,752)
      Net cash provided by financing activities
                                                                                7,429,900         1,311,121
                                                                              -----------      ------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                  542,606        (3,111,720)

CASH AND CASH EQUIVALENTS - JANUARY 1                                             645,817         3,469,304
                                                                              -----------      ------------

CASH AND CASH EQUIVALENTS - MARCH 31                                          $ 1,188,423      $    357,584
                                                                              ===========      ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest                                                                      $ 2,507,816      $  1,905,011
                                                                              ===========      ============
Income taxes                                                                  $   175,000      $          -
                                                                              ===========      ============
</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 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  months  ended  March  31,  2001  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 2001 presentation.

          It is suggested that these consolidated  financial  statements be read
          in conjunction  with the consolidated  financial  statements and notes
          thereto  included in the  Company's  Annual  Report for the year ended
          December 31, 2000.

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>
                                                       THREE MONTHS ENDED
                                                             MARCH 31,
                                                     --------------------------
                                                      2001                2000
                       <S>                           <C>                <C>
                       Basic                         778,677            787,184
                       Diluted                       809,893            828,903
</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, 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,  including  the  acceptance of demand and time
deposits,   and  the   origination  of  loans  to   individuals,   associations,
partnerships  and  corporations.  The Bank's real estate  financing  consists of
residential  first and second  mortgage  loans,  home equity lines of credit and
commercial  mortgage  loans.  Commercial  lending  consists of both  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
either 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  months,  the national and local economy has slowed its rate
of growth.  While the local economy  remains  strong,  any sustained  slowing of
economic  activity  or local or  national  recession  would be likely to have an
impact on the Bank's operations.  In addition,  the continued cutting of certain
short term  interest  rates by the  Federal  Reserve in  response to the slowing
economy may have a negative impact on the Bank's interest  income,  particularly
on the Bank's prime based lending products.

The Bank has also sought to increase its sources of  noninterest  income through
fees gathered on  transactional  accounts as well as by the sale of  non-deposit
products including investments.  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.

                                       8
<PAGE>

SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
                                                                                THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                                    ---------
                                                                                2001           2000
<S>                                                                         <C>            <C>
Condensed Income Statement
Interest Income                                                             $ 4,908,221    $ 4,335,248
Interest Expense                                                              2,487,219      2,048,121
Net Interest Income                                                           2,421,002      2,287,127
Provision for Loan Losses                                                        90,000         90,000
Noninterest Income                                                              347,528        292,119
Noninterest Expenses                                                          1,681,749      1,567,524
Income Before Income Taxes                                                      996,781        921,722
Income Tax Expense                                                              348,000        300,000
Net Income                                                                      648,781        621,722

Per Common Share
Basic Earnings                                                              $       .83    $       .79
Diluted Earnings                                                                    .80            .75
Book Value                                                                        31.43          26.94

</TABLE>







RESULTS OF OPERATIONS

Net income for the three month  period  ended March 31,  2001  totaled  $648,781
($.83 basic and $.80 fully diluted  earnings per share) compared with a total of
$621,722  ($.79 basic and $.75 fully  diluted  earnings  per share) for the same
period in the prior year.  This  increase of $27  thousand or 4.4% was caused by
several factors.  Net income was positively affected by the growth in the Bank's
net interest income, as well as growth in the Bank's  noninterest  income;  this
was  partially  offset by an increase  in  noninterest  expenses  and income tax
expense.


                                       9
<PAGE>
Interest income increased to $4.9 million in the current period compared to $4.3
million for the same period in the prior year. This increase of $573 thousand or
13.2% was caused primarily by an increase in loans receivable and other interest
earning assets over the same period in the prior year. This increase in interest
earning assets was partially  offset by a slight  decrease in interest yields on
interest earning assets.

Interest  expense  increased to $2.5 million in the period ending March 31, 2001
as compared to $2.1  million in the same period in the prior year an increase of
$439 thousand or 21.4%. This increase was due to higher balances of deposits and
long and short- term  borrowings as well as an increase in average rates paid on
these balances. Net interest income before provision for credit losses increased
by $134 thousand or 5.9% due to the factors noted above.

Provision  for loan  losses  was  comparable  to the prior  year with  provision
expense  of $90  thousand  for the  periods  ending  March  31,  2001 and  2000.
Management  will continue to  periodically  review its allowance for loan losses
and the  related  provision.  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 $348 thousand for the three month period ending
March 31, 2001,  an increase of $55 thousand or 19% over the prior year total of
$292 thousand. Increases in service charges on deposit accounts and certain loan
service  fees  offset a  decrease  in gains on sales of loans.  Service  charges
increased  because  growth in deposits has been  concentrated  in demand deposit
type accounts which tend to generate higher fees.

Noninterest  expense for the three month period  increased  by $114  thousand or
7.3% to $1.7  million  from $1.6  million in the same period for the prior year.
Expense  increases  were  primarily in  personnel,  data  processing,  and other
expenses  and were  needed to support  increased  levels of loans and  deposits.
Occupancy  costs  declined  as a result of  decreases  in  required  repairs and
maintenance at several branch locations.

Income taxes increased to $348 thousand or 34.9% or pretax income in the current
year compared to $300 thousand or 32.5% 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 year, 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 have  reduced  the  amount of  income  sheltered  from  state  income  tax,
increasing the effective tax rate.

FINANCIAL CONDITION

Assets

Total assets as of March 31, 2001 grew $9.1  million to $257.4  million from the
December 31, 2000 level of $248.3  million.  The Bank's loan  portfolio  grew by
$9.8  million or 5.7% during the three month period  ending March 31, 2001.  The
growth in the loan portfolio was partially  offset by decreases in certain other
asset types during the same period. The allowance for loan losses was maintained
at a level  believed by management  to be adequate to absorb  losses  consistent
with the risk  profile  of the loan  portfolio.  At March  31,  2001 the  Bank's
allowance  for loan  losses  totals  $2.0  million or 1.11% of loan  balances as
compared  to $1.9  million  or 1.12% of loan  balances  at  December  31,  2000.
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.

Investment  securities,  including  both  the  available  for  sale  and held to
maturity portfolios, decreased from $58.6 million to $56.5 million a decrease of
$2.1 million or 3.6%.  Reductions in the investment portfolio were primarily the
result of certain  callable bonds being redeemed.  These reductions in principal
were  partially  offset by an increase in the market value of certain  available
for sale securities.  In general, the cash generated by the principal reductions
of the investment portfolio has been used to fund loan growth. Cash and due from
banks  increased  by $543  thousand,  or 84% from  December  31,  2000's  total.
Interest-bearing  deposits with banks increased by $655 thousand or 11.0% during
the  quarter  to $6.6  million  at March 31,  2001.  The level of  property  and
equipment  balances  increased  $81,059  primarily  due to  upgrades of computer
equipment and premises.

Liabilities

Deposit  balances  increased  by $5.0 million or 3.0% for the three months ended
March 31, 2000. The Bank continues to aggressively  market its deposit  products
in the Southern  Maryland area. The recent  declines in certain  segments of the

                                       10
<PAGE>
equities  markets as well as the  apparent  slowing of the economy may also have
contributed  to the deposit  increase  as  alternative  investments  became less
attractive. Funding demands in excess of deposit growth have been met by the use
of other borrowed funds. Long and short term borrowings  increased by a total of
$2.5  million  or 4.5% over  December  2000  balances.  Other  liabilities  also
increased by $500 thousand or 24.8%.

Stockholders' Equity

Stockholders'  equity  increased  $1.1 million or 4.5% to $24.5 million at March
31, 2001 compared to $23.4  million at December 31, 2000.  This reflects the net
income of  $648,781  for the three  month  period  and a  $451,228  increase  in
accumulated  other  comprehensive  income.  Reductions  in equity  occurred as a
result of using $118,678 to purchase  shares in the open market and retire them.
Book value on a per share basis, $31.43 at March 31, 2001, as compared to $30.13
at  December  31,  2000,  reflects a 4.3%  increase,  in line with the change in
stockholder's equity.

As part of its  capital  management  strategy,  the Board has  approved  certain
purchases, for retirement,  of shares offered for sale by its stockholders.  For
the three months ended March 31, 2001,  the Company  purchased  4,580 shares for
$118,678. Additional stock acquisitions and retirements may be considered in the
future.  The Company has $800 thousand of cash available at the holding  company
level  available  for such  purchases  or for other  cash  needs of the  holding
company.


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 35% of  consolidated  Bank assets on a line  available
from the Federal Home Loan Bank of Atlanta.  As of March 31,  2001,  the maximum
available  under  this line  would be $90  million,  while  current  outstanding
advances totaled $56.7 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 March 31, 2001,
the Bank's tangible,  leverage and risk-based  capital ratios were 8.99%,  8.91%
and 14.03%, 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.

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<PAGE>

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

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






Item 6 - Exhibits and reports on Form 8-K


     A.   Exhibits Not Applicable

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



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<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 14, 2001                        By: /s/ Michael L. Middleton
       -----------------------                ----------------------------------
                                              Michael L. Middleton, President
                                              and Chairman of the Board



Date:  May 14, 2001                        By: /s/ William J. Pasenelli
       -----------------------                ----------------------------------
                                              William J. Pasenelli, Executive
                                              Vice President and Chief
                                              Financial Officer


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