***NEWS RELEASECONTACT: R. Jerry Giles, Chief Financial OfficerTELEPHONE #:  540-886-0796DATE:  July 30, 2003
FOR IMMEDIATE RELEASECOMMUNITY FINANCIAL REPORTS RECORD FIRST QUARTER EARNINGS STAUNTON, VIRGINIA

         Community Financial Corporation (NASDAQ: CFFC), a holding company whose sole subsidiary isCommunity Bank, Staunton, Virginia, today reported record earnings for the first quarter of its fiscal year endingMarch 31, 2004.  For the quarter ended June 30, 2003, Community Financial reported earnings of $997,000 or$0.47 per diluted share, compared to $744,000 or $0.33 per diluted share for the same period last year, a 42%increase in diluted earnings per share. The increase in net income for the current quarter compared to the June 30,2002 quarter can be attributed to both an increase in net interest income of approximately $342,000 and the gain onthe sale of Community First Mortgage Company, the mortgage-banking subsidiary. Net income for the June 30,2003 quarter, excluding the gain on the sale of the mortgage-banking subsidiary, was approximately $849,000 or$0.40 per diluted share.

         The increase in net interest income is attributed primarily to increases in both loans receivable andsecurities for the quarter ended June 30, 2003 compared to June 30, 2002. Loans receivable increased $28.4 millionor a 12.6% increase and securities increased $5.6 million or a 17.3% increase compared to the June 30, 2002quarter. Deposits increased to $248.9 million at June 30, 2003 from $217.8 million at June 30, 2002, a 14%increase. Total interest income remained relatively flat during the respective periods as a result of the increase in thevolume of interest earning assets substantially offsetting the decrease in rate earned on these assets. Total interestexpense decreased by $352,000 for the 2003 period compared to the same period in 2002 as a result of the decreasein the interest rates paid on interest-bearing liabilities substantially exceeding the increase in volume of interest-bearing liabilities. Our interest spread increased by seven basis points to 3.90% for the first quarter ended June 30,2003 compared to 3.83% for the same period in 2002.

         Non-interest income increased $647,000 to $1,407,000 for the quarter ended June 30, 2003 from $760,000for the June 30, 2002 quarter. The increase in non-interest income for the current quarter compared to the June 30,2002 period was due primarily to the gain on the sale of the Company's mortgage-banking subsidiary and increasedfees in the former mortgage-banking subsidiary related to increased loan volume. Non-interest expenses increased$600,000 to $2.8 million for the June 30, 2003 quarter from $2.2 million for the June 30, 2002 quarter. The increasein non-interest expenses was due primarily to an additional branch location, the purchase and renovation of anoperations building and implementation of internet services.

         After reviewing the Company's financial position and operating results the Board of Directors approvedand declared a $0.10 per share dividend payable August 27, 2003, to stockholders of record as of August 13, 2003,an 11% increase. Stockholder's equity totaled $27.3 million at June 30, 2003, which represents a book value of$13.18 per share. The Board of Directors of Community Financial also previously authorized a repurchase of up to10% of our outstanding shares or approximately 225,000 shares. As of June 30, 2003 Community Financial hadrepurchased 194,000 of these shares at a weighted average price of $12.15 per share.  

         At June 30, 2003, Community Bank exceeded all regulatory capital requirements and continued to beclassified as a "well capitalized" institution.  Community Bank, the wholly owned subsidiary of CommunityFinancial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Veronaand Virginia Beach.  Community Financial Corporation is traded on the Nasdaq National Market, under the symbolCFFC. 

         Except for the historical information in this press release, the matters discussed may be deemed to beforward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, thatinvolve risks and uncertainties, including, but not limited to, changes in economic conditions in the Company'smarket areas, changes in the financial condition or business prospects of the Company's borrowers, changes inpolicies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interestrates and the relationship between long and short term rates, operating results and other risks detailed from time totime in the Company's filings with the Securities and Exchange Commission.  Actual strategies and results in futureperiods may differ materially from those currently expected.  These forward-looking statements represent thecompany's judgment as of the date of this release.  The Company disclaims, however, any intent or obligation toupdate these forward-looking statements.***