COMMUNITY FINANCIAL CORPORATION
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN



                                    ARTICLE I
                              DEFINITIONS AND USAGE

     1.1 Definitions. Wherever used in the Plan, the following words and phrases
shall have the meanings set forth below  unless the context  plainly  requires a
different meaning:

     o    "Administrator"  means the person or persons  described in Section 6.1
          hereof.

     o    "Beneficiary" means the person or persons designated in writing by the
          Participant and of record with the Administrator.  In the absence of a
          valid   Beneficiary   designation  of  record  or  if  the  designated
          Beneficiary  predeceases the  Participant,  the  Participant's  estate
          shall be deemed to be the Participant's Beneficiary.

     o    "Board" means the Board of Directors of the Company.

     o    "Code" means the Internal  Revenue Code of 1986,  as amended from time
          to time.

     o    "Committee" means the Compensation Committee of the Board, if any, and
          otherwise, the Board.

     o    "Company" means, Community Financial Corporation, with primary offices
          located in Staunton, Virginia, and any successor thereto.

     o    "Compensation"  means  annual  salary,  excluding  bonuses,  paid to a
          Participant for personal services rendered to the Company for the last
          calendar year prior to the year in which a Participant  reaches Normal
          Retirement Age.

     o    "Eligible Employee" means an officer of the Company having the rank of
          Vice-President or above.

     o    "ERISA" means the Employee  Retirement Income Security Act of 1974, as
          amended from time to time.

     o    "Normal Retirement Age" means for each Participant age 65.

     o    "Participant"  means an Eligible  Employee who is participating in the
          Plan in accordance with Section 3.1 hereof, as shown on Schedule A.

     o    "Plan"  means  the  Community   Financial   Corporation   Supplemental
          Executive Retirement Plan.

     o    "Plan Year" means the calendar year.

     o    "Supplemental  Benefit" means the benefit  provided in accordance with
          Section 4.2 of the Plan.

     o    "Vesting  Percentage"  means for each Participant the  non-forfeitable
          percentage of benefit accrued from time to time, which shall be 100%.

     o    "Years of Service", for purposes of benefit accrual and vesting, means
          a Participant's  years of employment with the Company while serving at
          the officer rank of Vice President or higher.

     1.2 Usage. Except where otherwise  indicated by the context,  any masculine
terminology  used herein shall also include the feminine and vice versa, and the
definition of any term herein in the singular  shall also include the plural and
vice versa.

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                                   ARTICLE II
                                     GENERAL

     2.1  Effective  Date.  The  provisions of the Plan shall be effective as of
January 1, 1998.  The rights,  if any, of any person whose status as an employee
of the Company has  terminated  shall be  determined  pursuant to the Plan as in
effect  on the  date  such  employee  terminated,  unless  subsequently  adopted
provisions of the Plan are made specifically applicable to such person.

     2.2 Purpose. The purpose of the Plan is to provide supplemental  retirement
income to a Participant.  The Plan is intended to be (and shall be construed and
administered as) an "employee  pension benefit plan" under the provisions of the
Employee  Retirement Income Security Act of 1974 ("ERISA") which is unfunded and
is maintained  by the Company  solely to provide  retirement  income to a select
group of management or highly  compensated  employees as such group is described
under sections 201(2),  301(a)(3),  and 401(a)(1) of ERISA as interpreted by the
U.S.  Department  of Labor.  The Plan is not intended to be a plan  described in
section 401(a) of the Code or section 3(2)(A) of ERISA.

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

     3.1  Eligibility.  The  Committee  shall select from time to time  Eligible
Employees of the Company who shall participate in the Plan;  provided,  however,
that such Eligible Employees shall be members of a select group of management or
highly compensated employees.

     3.2  Participation.  An Eligible  Employee so  designated  by the Committee
shall  become a  Participant  at such time as the  Committee  shall  specify  in
writing as set forth on Schedule A, attached hereto.

                                   ARTICLE IV
                              SUPPLEMENTAL BENEFIT

     4.1  Entitlement  to Benefits.  Each  Participant  shall be entitled to the
Supplemental  Benefit  provided  in  Section  4.2 of the Plan  upon  terminating
employment  following the attainment of his Normal Retirement Age. A Participant
who terminates employment (for any reason other than disability or death) before
his  Normal  Retirement  Age shall be  entitled  to receive  his vested  accrued
Supplemental Benefit.

     4.2  Supplemental  Benefit.  Each Participant who satisfies the entitlement
requirements  provided in Section 4.1 of the Plan shall be entitled to an annual
Supplemental  Benefit at Normal Retirement Age which is determined in accordance
with the amount or formula as shown on Schedule A.

     4.3 Normal Form of Payment. The normal form of payment of the Participant's
Supplemental  Benefit  shall be a series  of  monthly  payments  (or such  other
periodic  payments as the  Administrator  and the  Participant  may agree) for a
period of twenty (20) years.

     4.4 Time of Payment. The payment of the Supplemental Benefit shall commence
on the  Participant's  termination  of employment at or after  attaining  Normal
Retirement Age or as soon thereafter as is reasonably practicable.

                                    ARTICLE V
                BENEFITS UPON DEATH OR TERMINATION OF EMPLOYMENT

     5.1  Pre-Retirement  Survivor  Benefit.  If a  Participant  dies before his
Benefit Commencement Date, then his Beneficiary shall be entitled to receive the
annual  Supplemental  Benefit to which the Participant  would have been entitled
upon reaching his Normal Retirement Age, payable as provided in Section 4.3.

     5.2  Post-Retirement  Survivor  Benefit.  If a  Participant  dies after his
Benefit  Commencement  Date,  then  the  balance  of  any  installments  of  his
Supplemental Benefit shall be paid to his Beneficiary over the remaining period.

     5.3  Termination  of  Employment  Prior  to  Normal  Retirement  Age.  If a
Participant  terminates employment prior to Normal Retirement Age for any reason
other than death,  he shall be entitled to receive a Supplemental  Benefit equal
to the vested portion of the benefit accrued to the date of such termination, in
accordance with the accrual method shown on Schedule A.

                                   ARTICLE VI
                                 ADMINISTRATION

     6.1 General. The Committee shall be the Administrator.  Except as otherwise
specifically  provided  in the Plan,  the  Committee  shall be  responsible  for
administration of the Plan.

     6.2  Administrative  Rules. The Committee may adopt such rules of procedure
as it deems desirable for the conduct of its affairs,  except to the extent that
such rules conflict with the provisions of the Plan.

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     6.3 Duties.  The  Committee  shall have the  following  rights,  powers and
duties:

     (a) The decision of the Committee in matters within its jurisdiction  shall
     be final, binding and conclusive upon the Company and upon any other person
     affected by such decision,  subject to the claims procedure hereinafter set
     forth.

     (b) The  Committee  shall  have the duty and  authority  to  interpret  and
     construe the  provisions of the Plan, to decide any question that may arise
     regarding the rights of employees,  Participants and beneficiaries, and the
     amounts of their respective interests,  to adopt such rules and to exercise
     such powers as the Committee may deem necessary for the  administration  of
     the Plan, and to exercise any other rights, powers or privileges granted to
     the Committee by the terms of the Plan.

     (c)  The  Committee  shall  maintain  full  and  complete  records  of  its
     decisions.  Its records shall  contain all relevant data  pertaining to the
     Participant  and his rights and duties under the Plan. The Committee  shall
     have the duty to maintain account records of all Participants.

     (d) The Committee  shall cause the  principal  provisions of the Plan to be
     communicated  to  the  Participants,  and a  copy  of the  Plan  and  other
     documents  to be  available  at the  principal  office of the  Company  for
     inspection  by the  Participants  at  reasonable  times  determined  by the
     Committee.

     (e) The Committee  shall  periodically  report to the Board with respect to
     the status of the Plan.

     6.4 Fees. No fee or  compensation  shall be paid to any person for services
as the Committee.

                                   ARTICLE VII
                                CLAIMS PROCEDURE

     7.1 General.  Any claim for  benefits  under the Plan shall be filed by the
Participant or Beneficiary  ("claimant") on the form prescribed for such purpose
with the Committee.

     7.2 Denials.  If a claim for benefits under the Plan is wholly or partially
denied,  notice  of the  decision  shall be  furnished  to the  claimant  by the
Committee  within a reasonable  period of time after receipt of the claim by the
Committee.

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     7.3  Notice.  Any  claimant  who is  denied a claim for  benefits  shall be
furnished  written notice setting forth:  (a) the specific reason or reasons for
the denial; (b) specific  reference to the pertinent  provision of the Plan upon
which the denial is based;  (c) a  description  of any  additional  material  or
information  necessary  for  the  claimant  to  perfect  the  claim;  and (d) an
explanation of the claim review procedure under the Plan.

     7.4 Appeals  Procedure.  In order that a claimant  may appeal a denial of a
claim, the claimant or the claimant's duly authorized representative may:

     (a)  request a review  by  written  application  to the  Committee,  or its
     designate,  no later than sixty (60) days after  receipt by the claimant of
     written notification of denial of a claim;

     (b)  review pertinent documents; and

     (c)  submit issues and comments in writing.

     7.5 Review.  A decision on review of a denied claim shall be made not later
than sixty  (60) days after  receipt of a request  for  review,  unless  special
circumstances  require  an  extension  of time for  processing,  in which case a
decision  shall be rendered  within a reasonable  period of time,  but not later
than one  hundred and twenty  (120) days after  receipt of a request for review.
The  decision  on review  shall be in writing  and shall  include  the  specific
reason(s)  for the  decision  and the  specific  reference(s)  to the  pertinent
provisions of the Plan on which the decision is based.

                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

     8.1  Amendment.  The  Company  reserves  the right to amend the Plan in any
manner that it deems  advisable  by a  resolution  of the Board,  which shall be
communicated  to  Participants  not later  than sixty  (60) days  following  the
effective date of such amendment.  No amendment shall, without the Participant's
consent, reduce the amount of the Participant's Supplemental Benefit accrued and
vested  at  the  time  the  amendment  becomes  effective  or the  right  of the
Participant to receive a Supplemental  Benefit after the Participant has met the
entitlement requirements provided in Section 4.1 of the Plan.

     8.2  Termination.  The Company  reserves the right to terminate the Plan at
any time by resolution of the Board,  which shall be communicated to Participant
not later than sixty (60) days following the effective  date of such  amendment.
No termination shall, without the consent of the Participant,  affect the amount
of the Participant's  Supplemental Benefit prior to the termination of the right
of the  Participant to receive a Supplemental  Benefit after the Participant has
met the entitlement requirements provided in Section 4.1 of the Plan.

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     8.3 No  Assignment.  The  Participant  shall not have the power to  pledge,
transfer,  assign,  anticipate,  mortgage or otherwise encumber or dispose of in
advance  any  interest  in  amounts  payable  hereunder  or any of the  payments
provided for herein,  nor shall any interest in amounts payable  hereunder or in
any payments be subject to seizure for payment of any debts or judgments,  or be
reached  or  transferred  by  operation  of  law  in the  event  of  bankruptcy,
insolvency or otherwise.

     8.4  Incapacity.  If the Committee  determines that any person to whom such
benefit is payable is  incompetent  by reason of physical or mental  disability,
the Committee  may cause the payments  becoming due to such person to be made to
another for his benefit.  Payments  made pursuant to this Section  shall,  as to
such payment,  operate as a complete  discharge of the Plan, the Company and the
Committee.

     8.5 Successors and Assigns. The provisions of the Plan are binding upon and
inure to the benefit of the Company, its respective  successors and assigns, and
the  Participant  and  his  beneficiaries,  heirs,  legal  representatives,  and
assigns.

     8.6 No  Guarantee  of  Employment.  Nothing  contained in the Plan shall be
construed  as a contract of  employment  or deemed to give any  Participant  the
right to be retained in the employ of the Company or to give any Participant any
equity or other interest in the assets, business, or affairs of the Company.

     8.7 Unfunded  Plan.  This Plan is intended to be "unfunded" for purposes of
both the Internal  Revenue Code and ERISA. The obligation of the Company to make
payments under this Plan constitutes  nothing more than an unsecured  promise of
the Company to make such  payments,  and any property of the Company that may be
set aside for the payment of benefits under this Plan shall, in the event of the
Company's  bankruptcy  or  insolvency,  remain  subject  to  the  claims  of the
Company's  general  creditors  until such benefits are distributed in accordance
with  Article IV hereof.  No  Participant  hereunder  shall have any interest or
right to assets the Company may set aside to be used to pay  benefits  under the
Plan. The rights of a Participant shall be no greater than those of an unsecured
general creditor with respect to the assets of the Company.



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     8.8  Severability.  If any  provision  of the Plan shall be held illegal or
invalid for any  reason,  such  illegality  or  invalidity  shall not affect the
remaining  provisions of the Plan,  but the Plan shall be construed and enforced
as if such illegal or invalid provision had never been included herein.

     8.9  Notification  of  Addresses.  Each  Participant  shall  file  with the
Committee,  from  time to time,  in  writing,  the post  office  address  of the
Participant,  the post office  address of each  Beneficiary,  and each change of
post office address.  Any  communication,  statement or notice  addressed to the
last post office  address  filed with the  Committee  (or if no such address was
filed  with  the  Committee,  then  to  the  last  post  office  address  of the
Participant or  beneficiary as shown on the Company's  records) shall be binding
on the Participant and each beneficiary for all purposes of the Plan and neither
the  Committee  nor any Company  shall be obliged to search for or ascertain the
whereabouts of any Participant or beneficiary.

     8.10  Governing  Law.  The  Plan  shall  be  subject  to and  construed  in
accordance  with  the  laws of  Virginia  to the  extent  not  preempted  by the
provisions of ERISA.

                                   COMMUNITY FINANCIAL CORPORATION



                                   By____________________________