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, 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 May 5,  2002  registrant  had  outstanding  769,033  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, 2002
       and December 31, 2001                                                 3

     Consolidated Statements of Income and Comprehensive Income -
       Three Months Ended March 31, 2002 and 2001                            4

     Consolidated Statements of Cash Flows - Three Months
       Ended March 31, 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                                        8-11
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, 2002 AND DECEMBER 31, 2001
<TABLE>
<CAPTION>
                                                     ASSETS
                                                                                March 31, 2002    December 31, 2001
<S>                                                                              <C>                    <C>
Cash and due from banks                                                          $ 1,159,803        $     693,439
Interest-bearing deposits with banks                                               6,951,148            7,678,158
Investment securities available for sale - at fair value                          42,414,268           41,673,742
Investment securities held to maturity - at amortized cost                         2,980,804            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                                                                  723,280            2,354,315
Loans receivable - net of allowance for loan losses
of $2,327,259 and $2,281,581, respectively                                       190,404,886          193,450,011
Premises and equipment, net                                                        5,666,599            5,432,848
Foreclosed real estate                                                             2,074,132            1,800,569
Accrued interest receivable                                                        1,114,792            1,049,401
Other assets                                                                       2,653,235            2,499,903
                                                                               -------------        -------------
     TOTAL ASSETS                                                              $ 259,178,497        $ 261,957,290
                                                                               =============        =============

                                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
Noninterest-bearing deposits                                                    $ 17,480,145         $ 17,738,165
Interest-bearing deposits                                                        163,511,427          165,378,369
                                                                               -------------        -------------
Total deposits                                                                   180,991,572          183,116,534
Short-term borrowings                                                                715,383            1,813,317
Long-term debt                                                                    48,650,000           48,650,000
Accrued expenses and other liabilities                                             2,670,883            2,790,981
                                                                               -------------        -------------
Total liabilities                                                                233,027,838          236,370,832
                                                                               -------------        -------------
STOCKHOLDERS' EQUITY:
Common stock - par value $.01; authorized - 15,000,000 shares;
issued 763,031 and 756,805 shares, respectively                                        7,630                7,568
Surplus                                                                            7,593,817            7,545,590
Retained earnings                                                                 18,300,943           17,678,367
Accumulated other comprehensive income                                               397,865              555,513
Unearned ESOP shares                                                                (149,596)            (200,580)
                                                                               -------------        -------------
Total stockholders' equity                                                        26,150,659           25,586,458
                                                                               -------------        -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $ 259,178,497        $ 261,957,290
                                                                               =============        =============
</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, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                ------------------------------
                                                                                    2002               2001
<S>                                                                             <C>                <C>
INTEREST INCOME:
   Interest and fees on loans                                                   $ 3,489,660        $ 3,810,273
   Taxable interest and dividends on investment securites                           654,697          1,076,151
   Interest on bank deposits                                                         23,242             21,797
                                                                                -----------        -----------
        Total interest income                                                     4,167,599          4,908,221
                                                                                -----------        -----------
INTEREST EXPENSE:
   Interest on deposits                                                             909,723          1,694,262
   Interest on long term debt                                                       639,905            201,571
   Interest on other borrowings                                                         360            591,386
                                                                                -----------        -----------
        Total interest expenses                                                   1,549,988          2,487,219
                                                                                -----------        -----------

NET INTEREST INCOME                                                               2,617,611          2,421,002
PROVISION FOR LOAN LOSSES                                                            70,000             90,000
                                                                                -----------        -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                               2,547,611          2,331,002
                                                                                -----------        -----------
NONINTEREST INCOME:
   Loan appraisal, credit, and miscellaneous charges                                 71,788             56,192
   Net gain on sale of loans held for sale                                          102,758             23,868
   Service charges                                                                  218,342            250,920
   Other income                                                                       4,461             16,548
                                                                                -----------        -----------
        Total noninterest income                                                    397,349            347,528
                                                                                -----------        -----------

NONINTEREST EXPENSE:
   Salary and employee benefits                                                   1,062,869            960,295
   Occupancy expense                                                                167,527            144,376
   Deposit insurance and surety bond premiums                                        24,765             35,883
   Data processing expense                                                          103,523            105,984
   Advertising                                                                       72,544             47,162
   Depreciation                                                                      43,999             53,385
   Other                                                                            454,067            334,664
                                                                                -----------        -----------
        Total noninterest expenses                                                1,929,294          1,681,749
                                                                                -----------        -----------

INCOME BEFORE INCOME TAXES                                                        1,015,666            996,781
INCOME TAXES                                                                        364,600            348,000
                                                                                -----------        -----------
NET INCOME                                                                          651,066            648,781

OTHER COMPREHENSIVE INCOME, NET OF TAX
   Net unrealized holding gains (losses) arising during the period                 (157,648)           451,228
                                                                                -----------        -----------
COMPREHENSIVE INCOME                                                            $   493,418        $ 1,100,009
                                                                                ===========        ===========
EARNINGS PER SHARE
   Basic                                                                                .86                .83
   Diluted                                                                              .82                .80
</TABLE>

See notes to consolidated financial statements

                                       4
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                               --------------------------------
                                                                                   2002                 2001
<S>                                                                            <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                     $    651,066        $   648,781
Adjustments to reconcile net income to net
   cash provided (used) by operating activities:
   Provision for loan losses                                                         70,000             90,000
   Depreciation and amortization                                                    119,499             77,550
   Net amortization of premium/discount on
     investment securities                                                             (109)            10,485
   Deferred income tax benefit                                                            -           (109,000)
    (Increase) decrease in accrued interest receivable                              (65,391)           102,284
   Decrease in deferred loan fees                                                    (7,164)            (4,734)
   (Decrease) increase in accounts payable, accrued expenses,
     and other liabilities                                                          (82,439)           533,543
   Increase in other assets                                                        (426,895)          (359,777)
   Gain on disposal of premises and equipment                                             -             (8,386)
   Origination of loans held for sale                                            (6,376,035)          (840,450)
   Gain on sales of loans held for sale                                            (102,758)           (23,869)
   Proceeds from sale of loans held for sale                                      4,847,758            858,869
                                                                               ------------        ------------
          Net cash (used) provided by operating activities                       (1,372,468)           975,296
                                                                               ------------        ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Net  decrease (increase) in interest-bearing deposits with banks                 727,010           (655,316)
   Purchase of investment securities available for sale                         (18,653,097)        (6,543,175)
   Proceeds from sale, redemption or principal payments
    of investment securities available for sale                                  17,717,374          9,104,510
   Purchase of investment securities held to maturity                            (1,201,212)                 -
   Proceeds from maturities or principal payments
    of investment securities held to maturity                                       509,762            216,858
   Loans originated or acquired                                                 (15,228,719)       (22,289,790)
   Principal collected on loans                                                  21,473,078         12,454,548
   Proceeds from disposal of premises and equipment                                       -              8,963
   Purchase of premises and equipment                                              (353,250)          (159,188)
                                                                               ------------        ------------
          Net cash provided (used) in investing activities                        4,990,946         (7,862,590)
                                                                               ------------        ------------
</TABLE>

                                       5
<PAGE>
TRI-COUNTY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED
                                                                                           MARCH 31,
                                                                               --------------------------------
                                                                                    2002               2001
<S>                                                                            <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net (decrease) increase in deposits                                          $(2,124,962)       $ 4,993,102
   Proceeds from long-term borrowings                                                     -         10,250,000
   Payments of long-term borrowings                                                       -         (5,000,000)
   Net decrease in other borrowed funds                                          (1,097,934)        (2,776,308)
   Exercise of stock options                                                         37,830             31,817
   Net change in unearned ESOP shares                                                61,452             49,967
   Redemption of common stock                                                       (28,500)          (118,678)
                                                                                -----------        -----------

      Net cash provided by financing activities                                  (3,152,114)         7,429,900
                                                                                -----------        -----------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                    466,364            542,606

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

CASH AND CASH EQUIVALENTS - MARCH 31                                              1,159,803          1,188,423
                                                                                -----------        -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the three months for:
Interest                                                                        $ 1,670,605        $ 2,507,816
                                                                                ===========        ===========
Income taxes                                                                    $   275,000        $   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 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 months ended March 31, 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 thereto
     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>
                                                         THREE MONTHS ENDED
                                                             MARCH 31,
                                                     --------------------------
                                                      2002                2001
             <S>                                     <C>                <C>
             Basic                                   758,760            778,677
             Diluted                                 791,100            809,893
</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,  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
residential first mortgage lending and investment  securities has declined since
1997. Conversely,  targeted loan types have increased. The Bank has also seen an
increase  in  transactional  deposit  accounts  while  the  percentage  of total
liabilities   represented  by   certificates  of  deposits  has  also  declined.
Management believes that these changes will enhance the Bank's overall long-term
financial performance.

Management recognizes that the shift in composition of the Bank's loan portfolio
will tend to increase its exposure to credit  losses.  The Bank has continued to
evaluate  its  allowance  for  loan  losses  and  the  associated  provision  to
compensate  for the  increased  risk.  Any  evaluation of the allowance for loan
losses is inherently inexact and reflects management's expectations as to future
economic  conditions  in the  Southern  Maryland  area  as  well  as  individual
borrower's circumstances. Management believes that its allowance for loan losses
is adequate.

For the last several quarters,  the national and local economy has experienced a
significant  slowing if not an actual  contraction in economic growth. The local
economy in our market area 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.

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.

                                       8
<PAGE>

SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                             MARCH 31,
                                                             ---------
                                                        2002           2001
<S>                                                <C>                <C>
Condensed Income Statement
Interest Income                                    $4,167,599         $4,908,221
Interest Expense                                    1,549,988          2,487,219
Net Interest Income                                 2,617,611          2,421,002

Provision for Loan Losses                              70,000             90,000

Noninterest Income                                    397,349            347,528
Noninterest Expenses                                1,929,294          1,681,749
Income Before Income Taxes                          1.015,666            996,781

Income Tax Expense                                    364,600            348,000

Net Income                                            651,006            648,781


Per Common Share
Basic Earnings                                     $      .86         $      .83

Diluted Earnings                                          .82                .80

Book Value                                              34.27              31.43

</TABLE>

RESULTS OF OPERATIONS

Net income for the three month  period  ended March 31,  2002  totaled  $651,066
($.86 basic and $.82 fully diluted  earnings per share) compared with a total of
$648,781  ($.83 basic and $.80 fully  diluted  earnings  per share) for the same
period in the prior  year.  This  increase  of $2  thousand or .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.

Interest income decreased to $4.2 million in the current period compared to $4.9
million for the same period in the prior year. This decrease of $741 thousand or
15.1% was caused  primarily by an overall  decline in interest  rates on earning
assets,  which were affected by the declining  interest rate  environment.  This
decline  in  interest  rate yield on earning  assets was  partially  offset by a
slight increase in average  balances of interest  earning  assets.  In addition,
earning  assets  shifted from  investments  to loans compared to the same period
during the prior year.

Interest  expense also  decreased to $1.5 million in the period ending March 31,
2002 as compared to $2.5 million in the same period in the prior year a decrease
of $937 thousand or 37.7%. 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 due to the decline in interest  rates.  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 and adding interest rate sensitive loans.

Provision  for loan  losses  declined  slightly  from prior  year  levels to $70
thousand  from $90  thousand  for the  periods  ending  March 31, 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 $397 thousand for the three month period ending
March 31,  2002,  an increase of $50 thousand or 14.3% over the prior year total
of $348 thousand.  Decreases in service charges on deposit  accounts were offset
by an  increase  in fees and gains  related to mortgage  loan  originations  and
sales.

                                       9
<PAGE>

Noninterest  expense for the three month period  increased  by $248  thousand or
14.7% to $1.9  million  from $1.7 million in the same period for the prior year.
Expense increases were primarily in personnel, occupancy, advertising, and other
expenses  that were needed to support  increased  levels of loans and  deposits.
Noninterest  expense was also affected by our planned conversion to another core
system  provider.  Costs wee incurred for training,  travel,  and other costs to
prepare the Bank for the planned conversion,  scheduled to take place on May 18,
2002.

Income taxes increased to $365 thousand or 35.9% of pretax income in the current
year compared to $348 thousand or 34.9% 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.

FINANCIAL CONDITION

Assets

Total assets as of March 31, 2002  decreased  by $2.8 million to $259.2  million
from the  December  31, 2001 level of $262  million.  The Bank's loan  portfolio
declined by $3 million or 1.6% during the three month  period  ending  March 31,
2002.  Most of the decline was related to  reductions  in the level of purchased
interests in certain  loans,  and to continued  prepayments  on our  residential
mortgage loan portfolio.  The decline in the loan portfolio was partially offset
by a slight  increase in total  investment  securities to $45.4 million at March
31, 2002 from $44.0 million as of December 31, 2001, an increase of $1.4 million
or 3.3%.  At March 31, 2002 the Bank's  allowance  for loan  losses  totals $2.3
million or 1.22% of loan  balances as 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.

Investment  securities,  including  both  the  available  for  sale  and held to
maturity  portfolios,  increased from $44.0 million to $45.4 million an increase
of $1.4  million or 3.3%.  Increases  were  primarily  the result of  additional
purchases of investments using loan proceeds of loan  prepayments.  Cash and due
from banks  increased by $466  thousand,  or 67% from December 31, 2001's total.
Interest-bearing  deposits  with banks  declined by $727 thousand or 9.5% during
the  quarter  to $7.0  million  at March 31,  2002.  The level of  property  and
equipment balances increased $234 thousand primarily due to upgrades of computer
equipment and premises.

Liabilities

Deposit  balances  decreased  by $2.1 million or 1.2% for the three months ended
March 31, 2002. This decline  occurred in both interest and noninterest  bearing
deposits.  Management  believes  that  the  low  interest  rate  environment  is
decreasing  customers'  demands for  interest  bearing  accounts.  The Bank will
continue to market offerings in their  noninterest  bearing accounts despite the
slight  decline in balances for the quarter  ending March 31, 2002. The Bank has
used  excess  funds  generated  by the  decline  in assets to reduce  short term
borrowings,  which  declined to $715  thousand from $1.8 million at December 31,
2001,  a reduction  of $1.0  million or 60.6%.  Long term debt was  unchanged at
$48.7  million  at March 31,  2002 and  December  31,  2001.  Other  liabilities
declined  slightly  to $2.7  million  at March 31,  2002 from  $2.1  million  at
December 31, 2001, a decline of 4.3%.

Stockholders' Equity

Stockholders'  equity  increased $564 thousand or 2.2% to $26.2 million at March
31, 2002 compared to $25.6  million at December 31, 2001.  This reflects the net
income of $651,066  for the three month  period  partially  offset by a $157,648
decline in  accumulated  other  comprehensive  income.  Other  changes in equity
occurred as a result of using $28,500 to purchase  shares in the open market and
retire them, the exercise of stock options of $37,830,  and a change in unearned
ESOP shares of  $61,452.  Book value on a per share  basis,  $34.27 at March 31,
2002, as compared to $33.80 at December 31, 2001,  reflects a 1.4% 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, 2002,  the Company  purchased  1,000 shares for
$28,500.  Additional stock acquisitions and retirements may be considered in the
future.  The Company has $600 thousand of cash available at the holding  company
level  available  for such  purchases  or for other  cash  needs of the  holding
company.

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<PAGE>

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 FHLB. As of March 31, 2002, the maximum available under this line would
be $91 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 March 31, 2002,
the Bank's tangible,  leverage and risk-based  capital ratios were 9.93%,  9.96%
and 14.63%, 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.


                                       12
<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 __, 2002                   By:/s/ Michael L. Middleton
                                        ----------------------------------------
                                        Michael L. Middleton, President
                                        and Chairman of the Board




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

                                       13