**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549**

FORM 10-QSB

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE            ACT OF 1934

For the quarterly period ended December 31, 2001

[  ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE            ACT OF 1934

For the transition period from **** to ****





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|VIRGINIA                                                      | 54-1532044                         
|------------------------------------------------------------- | -----------------------------------
|(State of other jurisdiction ofincorporation or organization) | (I.R.S. EmployerIdentification No.)

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Number of shares of Common Stock, par value $.01 per share, outstanding at the close of business on February 8, 2002:  2,253,147.

Transitional Small Business Disclosure Format (Check one):         Yes  [  ]                  No  [X]





|PART I.  | FINANCIAL INFORMATION                                                                                       |   
|-------- | ----------------------------------------------------------------------------------------------------------- | --
|Item 1.  | Consolidated Financial Statements                                                                           |   
|         | Consolidated Statements of Financial Conditionat December 31, 2001 (unaudited) and March 31, 2001           | 1 
|         | Consolidated Statements of Income for theThree and Nine Months Ended December 31, 2001 and 2000 (unaudited) | 2 
|         | Consolidated Statements of Cash Flows for theNine Months Ended December 31, 2001 and2000 (unaudited)        | 3 
|         | Notes to Unaudited Interim ConsolidatedFinancial Statements                                                 | 4 
|Item 2.  | Management's Discussion and Analysis of FinancialCondition and Results of Operations                        | 7 
|PART II. | OTHER INFORMATION                                                                                           | 11



|                                                                                                                                                       | December 31,2001 | March 31, 2001
|------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------- | --------------
|                                                                                                                                                       | (Unaudited)      |               
|ASSETS                                                                                                                                                 |                  |               
|Cash (including interest-bearing deposits of approximately
  $1,334,731 at December 31, 2001 and $2,697,000 at March 31, 2001)                         | $    2,141,010   | $    5,168,499
|Securities                                                                                                                                             |                  |               
|Held to maturity                                                                                                                                       | 14,769,823       | 29,905,180    
|Available for sale                                                                                                                                     | 8,373,128        | 8,421,433     
|Investment in Federal Home Loan Bank stock, at cost                                                                                                    | 2,600,000        | 3,150,000     
|Loans receivable, net                                                                                                                                  | 219,951,501      | 214,557,798   
|Real estate owned                                                                                                                                      | 985,143          | 451,310       
|Property and equipment, net                                                                                                                            | 5,501,547        | 5,827,020     
|Accrued interest receivable                                                                                                                            |                  |               
|Loans                                                                                                                                                  | 1,151,307        | 1,421,726     
|Investments                                                                                                                                            | 234,364          | 239,696       
|Prepaid expenses and other assets                                                                                                                      | 1,541,826        | 1,032,871     
|Total Assets                                                                                                                                           | $257,249,649     | $270,175,533  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                   |                  |               
|Liabilities                                                                                                                                            |                  |               
|Deposits                                                                                                                                               | $189,272,367     | $174,307,472  
|Advances from Federal Home Loan Bank                                                                                                                   | 37,700,000       | 63,000,000    
|Securities sold under agreement to repurchase                                                                                                          | 589,601          | 4,422,389     
|Advance payments by borrowers for taxes and insurance                                                                                                  | 171,474          | 293,168       
|Other liabilities                                                                                                                                      | 3,173,337        | 2,347,815     
|Total Liabilities                                                                                                                                      | 230,906,779      | 244,370,844   
|Stockholders' Equity                                                                                                                                   |                  |               
|Preferred stock $.01 par value, authorized 3,000,000 shares,
    none outstanding                                                                      |                  |               
|Common stock, $.01 par value, authorized 10,000,000 shares,
    2,258,142 and 2,348,832 shares outstanding at December 31, 2001
    and March 31, 2001 | 22,581           | 23,488        
|Additional paid in capital                                                                                                                             | 4,328,139        | 4,500,450     
|Retained earnings                                                                                                                                      | 19,870,387       | 19,144,552    
|Accumulated other comprehensive income                                                                                                                 | 2,121,763        | 2,136,199     
|Total Stockholders' Equity                                                                                                                             | 26,342,870       | 25,804,689    
|Total Liabilities and Stockholders' Equity                                                                                                             | $257,249,649     | $270,175,533  



|                                                           | Three Months Ended
December 31 | Nine Months Ended
December 31
|---------------------------------------------------------- | ------------------------------ | -----------------------------
|                                                           | 2001                           | 2000                         
|                                                           | (Unaudited)                    | (Unaudited)                  
|INTEREST INCOME  Loans                                     | $4,093,083                     | $4,468,569                   
|Investment securities                                      | 187,622                        | 638,770                      
|Other                                                      | 166,838                        | 42,761                       
|Total interest income                                      | 4,447,543                      | 5,150,100                    
|INTEREST EXPENSE
  Deposits                                | 1,815,056                      | 2,029,387                    
|Borrowed money                                             | 176,113                        | 1,086,765                    
|Total interest expense                                     | 1,991,169                      | 3,116,152                    
|NET INTEREST INCOME                                        | 2,456,374                      | 2,033,948                    
|PROVISION FOR LOAN LOSSES                                  | 75,234                         | 40,815                       
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES        | 2,381,140                      | 1,993,133                    
|NONINTEREST INCOME
  Service charges, fees and commissions | 837,569                        | 681,588                      
|Miscellaneous                                              | 23,128                         | 23,941                       
|Total noninterest income                                   | 860,697                        | 705,529                      
|NONINTEREST EXPENSE
  Compensation & benefits              | 1,247,466                      | 1,060,684                    
|Occupancy                                                  | 345,234                        | 318,133                      
|Data processing                                            | 202,128                        | 205,826                      
|Federal insurance premium                                  | 8,067                          | 7,986                        
|Miscellaneous                                              | 419,985                        | 594,025                      
|Total noninterest expense                                  | 2,222,880                      | 2,186,654                    
|INCOME BEFORE TAXES                                        | 1,018,957                      | 512,008                      
|INCOME TAXES                                               | 340,114                        | 180,619                      
|NET INCOME                                                 | $    678,843                   | $    331,389                 
|BASIC EARNINGS PER SHARE                                   | $          0.30                | $          0.14              
|DILUTED EARNINGS PER SHARE                                 | $          0.30                | $          0.14              
|DIVIDENDS PER SHARE                                        | $          0.08                | $          0.08              



|                                                                                     | Nine Months Ended
December 31,
|------------------------------------------------------------------------------------ | ------------------------------
|                                                                                     | 2001                          
|                                                                                     | (Unaudited)                   
|OPERATING ACTIVITIES                                                                 |                               
|Net income                                                                           | $  2,043,313                  
|Adjustments to reconcile net income to
    net cash provided by operating activities |                               
|Provision for loan losses                                                            | 249,332                       
|Depreciation                                                                         | 502,456                       
|Amortization of premium and accretion of discount on securities, net                 | (110,902)                     
|(Decrease) in net deferred loan fees                                                 | (66,559)                      
|Increase in deferred income taxes                                                    | 53,924                        
|(Increase) in other assets                                                           | (508,955)                     
|Increase (decrease) other liabilities                                                | 834,394                       
|(Gain) on sale of loans                                                              | (192,428)                     
|Proceeds from sale of loans                                                          | 57,178,315                    
|Loans originated for resale                                                          | (56,399,340)                  
|Net cash provided by operating activities                                            | 3,583,550                     
|INVESTING ACTIVITIES                                                                 |                               
|Proceeds from maturities of held to maturity securities                              | 24,240,000                    
|Purchases of investment securities                                                   | (8,993,741)                   
|Net (increase) in loans                                                              | (6,061,325)                   
|Purchases of property and equipment                                                  | (176,893)                     
|Redemption (purchase) of FHLB stock                                                  | 550,000                       
|Decrease (increase) decrease in real estate owned                                    | (533,833)                     
|Net cash provided (absorbed) by investing activities                                 | 9,024,208                     
|FINANCING ACTIVITIES                                                                 |                               
|Dividends paid                                                                       | (551,827)                     
|Net increase in deposits                                                             | 14,964,895                    
|Proceeds from advances and other borrowed money                                      | 464,519,699                   
|Repayments of advances and other borrowed money                                      | (493,652,486)                 
|Proceeds from issuance of common stock                                               | -                             
|Repurchase of common stock                                                           | (925,528)                     
|Net cash provided (absorbed) by financing activities                                 | (15,635,247)                  
|(DECREASE) IN CASH AND CASH EQUIVALENTS                                              | (3,027,489)                   
|CASH AND CASH EQUIVALENTS-beginning of period                                        | 5,168,499                     
|CASH AND CASH EQUIVALENTS-end of period                                              | $  2,141,010                  



NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB
and Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.

The accompanying consolidated financial statements include the accounts of Community Financial Corporation
("Community" or the "Company"), its wholly-owned subsidiary, Community Bank (the "Bank") and Community
First Mortgage Corporation, a wholly-owned subsidiary of the Bank ("First Mortgage").  All significant
intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for
fair presentation have been included.  Operating results for the three and nine months ended December 31, 2001, are not
necessarily indicative of the results that may be expected for the year ending March 31, 2002.

NOTE 2 - EARNINGS PER SHARE

Basic earnings per share is based on net income divided by the weighted average number of common shares
outstanding during the period.  Diluted earnings per share shows the dilutive effect of additional common shares
issuable under stock option plans. Diluted earnings per share is computed by dividing net earnings by the weighted
average number of common shares and common share equivalents outstanding. Basic and diluted earnings per share are computed in the following table.

|                                          | For the Three Months Ended
|----------------------------------------- | --------------------------
|                                          |                           
|                                          | December 31, 2001         
|                                          | Income                    
|                                          |                           
|Basic EPS                                 |                           
|                                          |                           
|Income available to
  common stockholders | $678,843                  
|                                          |                           
|Effect of Dilutive Securities             |                           
|                                          |                           
|Options                                   | ---                       
|                                          |                           
|Diluted EPS                               |                           
|                                          |                           
|Income available to
  common stockholders | $678,843                  

|                                          | For the Nine Months Ended
|----------------------------------------- | -------------------------
|                                          |                          
|                                          | December 31, 2001        
|                                          | Income                   
|                                          |                          
|Basic EPS                                 |                          
|                                          |                          
|Income available to
  common stockholders | $2,043,313               
|                                          |                          
|Effect of Dilutive Securities             |                          
|                                          |                          
|Options                                   | ---                      
|                                          |                          
|Diluted EPS                               |                          
|                                          |                          
|Income available to
  common stockholders | $2,043,313               

NOTE 3 - STOCKHOLDERS' EQUITY

The following table presents the Bank's regulatory capital levels at December 31, 2001:

|                   | AmountRequired | PercentRequired | ActualAmount | ActualPercent | ExcessAmount
|------------------ | -------------- | --------------- | ------------ | ------------- | ------------
|                   |                |                 |              |               |             
|Tangible Capital   | $  3,854,000   | 1.50%           | $23,267,000  | 9.05%         | $19,413,000 
|Core Capital       | 10,279,000     | 4.00            | 23,267,000   | 9.05          | 12,988,000  
|Risk-based Capital | 16,070,000     | 8.00            | 26,400,000   | 13.13         | 10,330,000  

Capital distributions by OTS-regulated savings banks are limited by regulation ("Capital Distribution Regulation").
Capital distributions are defined to include, in part, dividends, stock repurchases and cash-out mergers.  The Capital
Distribution Regulation permits a savings bank to make capital distributions during a calendar year equal to net
income for the current year plus the previous two years net income, less capital distributions paid over the same
period. Any distributions in excess of that amount requires prior OTS approval. The Capital Distribution Regulation
requires that savings banks in holding company structures provide the applicable OTS Regional Director with a 30-day advance written notice of all proposed capital distributions whether or not advance approval is required by the
regulation. The OTS may object to capital distributions if the bank is not meeting its regulatory capital
requirements, the distribution raises safety and soundness concerns or is otherwise in violation of law.

NOTE 4 - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS

Total interest paid for the three months ended December 31, 2001 and 2000 was
$2,132,008 and $3,091,337, respectively. Total interest paid for the nine
months ended December 31, 2001 and 2000 was $7,219,914 and $8,895,333. Total
income taxes paid for the three months ended December 31, 2001 and 2000 was
$320,259 and $17,148. Total income taxes paid for the nine months ended
December 31, 2001 and 2000 was $1,351,451 and $374,566.

NOTE 5 - COMPREHENSIVE INCOME

Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from
transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a
period except those resulting from investments by owners and distributions to owners." Comprehensive income for
the Company includes net income and unrealized gains and losses on securities available for sale. The following
tables set forth the components of comprehensive income for the three-month periods ended December 31, 2001 and
2000:

|                                                                                                                                                      | Three Months Ended December 31
|----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------
|                                                                                                                                                      | 2001                          
|                                                                                                                                                      | (Amounts in thousands)        
|                                                                                                                                                      |                               
|Net income                                                                                                                                            | $ 678,843                     
|Other comprehensive income, net of tax
    Unrealized gains (losses) on securities:
      Unrealized holding gains (losses) arising during the period | 5,395                         
|                                                                                                                                                      |                               
|                                                                                                                                                      | $ 684,238                     

|                                                                                                                                                      | Nine Months Ended December 31
|----------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------
|                                                                                                                                                      | 2001                         
|                                                                                                                                                      | (Amounts in thousands)       
|                                                                                                                                                      |                              
|Net income                                                                                                                                            | $2,043,313                   
|Other comprehensive income, net of tax
    Unrealized gains (losses) on securities:
      Unrealized holding gains (losses) arising during the period | (14,436)                     
|                                                                                                                                                      |                              
|                                                                                                                                                      | $2,028,877                   

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS.

FINANCIAL CONDITION

The Company's total assets decreased $12.9 million to $257.2 million at
December 31, 2001 from $270.2 million at March 31, 2001 due primarily to a
decrease in held to maturity securities of $15.1 million, the majority of
which were redeemed by the issuer. The proceeds from securities that were
called or matured during the period were used primarily to reduce borrowings.
Deposits increased $15.0 million to $189.3 million at December 31, 2001, from
$174.3 million at March 31, 2001. While the increase in deposits was due to
increases in all deposit categories, savings and transaction accounts
represented the largest increase. Savings accounts increased by $5.7 million
and demand accounts increased $7.4 million for the nine months ended December
31, 2001. Stockholders' equity increased $538,000 to $26.3 million at December
31, 2001, from $25.8 million at March 31, 2001, due primarily to earnings for
the nine month period ended December 31, 2001 which was partially offset by a
decrease in the net unrealized gain on securities available for sale, the
Company's stock repurchase of $916,000 and three payments of $0.08 per share
in cash dividends.

At December 31, 2001, non-performing assets totaled approximately $1.5 million
or .60% of assets compared to $1.2 million or .43% of assets at March 31,
2001. Non-performing assets at December 31, 2001 were comprised primarily of
real estate acquired by foreclosure. At December 31, 2001, our allowance for
loan losses to non-performing assets was 109% and to total assets was .66%.
Based on current market values of the properties securing these loans,
management anticipates no significant losses in excess of the reserves for losses previously recorded.

As of December 31, 2001, there were also $2.4 million in loans with respect to which known
information about the possible credit problems of the borrowers or the cash flows of the security
properties have caused management to have doubts as to the ability of the borrowers to comply
with present loan repayment terms and which may result in the future inclusion of such items in
the non-performing asset categories. These loans are comprised primarily of residential real estate loans.  Included in the residential real estate loans
of concern was a loan to one borrower in the amount of $575,000, which was
removed from loans of concern due to the receipt of current financial
information subsequent to December 31, 2001.

We maintain an allowance for loan losses to provide for estimated probable losses in our loan portfolio.  Management determines the level of reserves based on loan performance, the value of the collateral, economic and market conditions, and previous experience.  Management reviews the adequacy of the allowance at least quarterly, utilizing its internal loan classification system.  Management believes that the loan loss reserve is adequate at December 31, 2001.  Although management believes it uses the best information available, future adjustments to reserves may be necessary.

LIQUIDITY

Historically, the Bank has maintained its liquid assets at a level believed adequate to meet requirements of normal daily activities,
repayment of maturing debt and potential deposit outflows. Management believes
that the Bank will continue to have adequate liquidity for the foreseeable
future. Cash flow projections are regularly reviewed and updated to assure
that adequate liquidity is provided. As of December 31, 2001, the Bank's
liquidity ratio (liquid assets as a percentage of net withdrawable savings and
current borrowings) was 10.9%.

At December 31, 2001, we had commitments to purchase or originate $15.9
million of loans. Certificates of deposit scheduled to mature in one year or
less at December 31, 2001, totaled $57.8 million. Based on our historical
experience, management believes that a significant portion of such deposits
will remain with us. Management further believes that loan repayments and
other sources of funds will be adequate to meet our foreseeable short-term and
long-term liquidity needs.

RESULTS OF OPERATIONS

Three Months Ended December 31, 2001 and 2000.

General.  Net income for the three months ended December 31, 2001 was $679,000
compared to $331,000 for the three months ended December 31, 2000 an increase
of $348,000. Net interest income increased $422,000, while non-interest income
increased $155,000 during the three months ended December 31, 2001 compared to
the same period in 2000. Income before taxes increased by $507,000 to
$1,019,000 for the three months ended December 31, 2001 from $512,000 for the
three months ended December 31, 2000. Return on equity for the three months
ended December 31, 2001 was 10.34% compared to 5.17% for the three month
period ended December 31, 2000. Return on assets increased to 1.07% for
quarter ended December 31, 2001 from .51% for the same period in the previous
fiscal year.

Interest Income.   Total interest income decreased by $703,000 to $4.4 million
for the three months ended December 31, 2001, from $5.2 million for the three
months ended December 31, 2000, due to decreases in investment securities as
described above and decreases on the yield for both investment securities and
loans for the three months ended December 31, 2001 as compared to the period
ended December 31, 2000. The decline in yield was due to the decline in market
interest rates generally. The average yield earned on interest-earning assets
was 7.44% for the three months ended December 31, 2001 compared to 8.10% for
the three months ended December 31, 2000.

Interest Expense.  Total interest expense decreased by $1.1 million to $2.0
million for the quarter ended December 31, 2001, from $3.1 million for the
quarter ended December 31, 2000. Interest on deposits decreased by $214,000 to
$1.8 million for the quarter ended December 31, 2001 from $2.0 million for the
quarter ended December 31, 2000 due primarily to a 94 basis point decline in
the average rate paid on deposits to 3.65%. Interest expense on borrowed money
decreased by $911,000 to $176,000 for the quarter ended December 31, 2001,
from $1.1 million for the quarter ended December 31, 2000, due to decreases
both in the rate paid and the average outstanding balances on borrowings.  The
average rate paid on interest-bearing liabilities was 3.63% during the three
months ended December 31, 2001 compared to 5.30% for the three months ended
December 31, 2000 due to a decrease in the level of market interest rates
generally.

Provision for Loan Losses.  The provision for loan losses increased by $34,000
to $75,000 for the three months ended December 31, 2001, from $41,000 for the
three months ended December 31, 2000.

Noninterest Income.  Noninterest income increased by $155,000 to $861,000 for
the three months ended December 31, 2001, from $706,000 for the three months
ended December 31, 2000 due primarily to an increase in service charges, fees,
commissions and gain on the sale of mortgage loans in the secondary market by
our mortgage-banking subsidiary, during the December 31, 2001 quarter. The
increase is related to increased loan volume and related decreased interest
rates. Changes in gain on the sale of mortgage loans and fees are related to
the changes in interest rates and associated loan volume.

Noninterest Expense.  Noninterest expense increased by $36,000 to $2.2 million
for the three months ended December 31, 2001 compared to the same period last
year. Miscellaneous expense decreased by $174,000 to $420,000 during the
December 31, 2001 quarter compared to the December 31, 2000 quarter.
Compensation and benefits increased by $187,000 to $1.2 million compared to
the same period last year due primarily to the addition of employees and
annual salary increases.

Taxes.  Taxes increased by $159,000 to $340,000 for the three months ended
December 31, 2001, from $181,000 for the three months ended December 31, 2000
due to increased income before taxes.  The effective tax rate decreased from
35.3% for the December 31, 2000 quarter to 33.4% for the December 31, 2001
quarter.

Nine Months Ended December 31, 2001 and 2000.

General.  Net income for the nine months ended December 31, 2001 increased to
$2,043,000 compared to $1,169,000 for the nine months ended December 31, 2000
due primarily to an increase net interest income. Income before income taxes
increased to $3.0 million for the nine months ended December 31, 2001 from
$1.8 million for the same period in the prior year. Return on equity for the
nine months ended December 31, 2001 was 10.53% compared to 6.09% for the nine
month period ended December 31, 2000. Return on assets increased to 1.09% for
nine months ended December 31, 2001 from .62% for the same period in the
previous fiscal year.

Interest Income.  Total interest income decreased to $14.6 million for the
nine months ended December 31, 2001, from $14.8 million for the nine months
ended December 31, 2000, due primarily to an decrease in the average balance
of investment securities outstanding and a decrease in the yield on loans and
investment securities during the period. The yield on loans and securities
decreased from 8.20% to 7.77% for the same periods.

Interest Expense.  Total interest expense decreased to $7.3 million for the
nine months ended December 31, 2001, from $8.9 million for the nine months
ended December 31, 2000.  Interest on deposits increased to $5.8 million for
the nine months ended December 31, 2001, from $5.6 million for the same period
last year due to an increase in the average outstanding deposit balances. The
rate paid on deposits decreased from 4.83% for the nine months ended December
31, 2000 to 4.27% for the same period in the current fiscal year. Interest
expense on borrowed money decreased to $1.4 million for the nine months ended
December 31, 2001 from $3.3 million for the nine months ended December 31,
2000, due to decreases in both the rate paid and average borrowings. The
average rate paid on interest-bearing liabilities was 4.18% during the three
months ended December 31, 2001 compared to 5.22% for the three months ended
December 31, 2000 due to a decrease in the level of market interest rates
generally.

Provision for Loan Losses.  The provision for loan losses increased to
$249,000 for the nine months ended December 31, 2001, from $207,000 for the
same period last year.

Noninterest Income.  Noninterest income increased to $2.5 million for the nine
months ended December 31, 2001, from $2.2 million for the nine months ended
December 31, 2000, due primarily to an increase in fees on the sale of
mortgage loans by our mortgage-banking subsidiary.

Noninterest Expenses.  Noninterest expenses increased $440,000 for the nine
months ended December 31, 2001, compared to the same period last year.
Compensation and benefits increased by $374,000 to $3.6 million compared to
the same period last year due primarily to the addition of employees and
annual salary increases.

Taxes.  Taxes increased to $965,000 for the nine months ended December 31, 2001, from $631,000 for the nine months ended December 31, 2000.  The effective
tax rate decreased from 35.0% for the December 31, 2000 period to 32.1% for
the same period ended December 31, 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In July, 2001 the Financial Accounting Standards Board issued two
statements- Statement No.141, Business Combinations, and Statement No.142,
"Goodwill and Other Intangible Assets", which will potentially impact the
accounting for goodwill and other intangible assets.  Statement No.141 eliminates
the pooling method of accounting for business combinations and requires that
intangible assets that meet certain criteria be reported separately from
goodwill.  The Statement also requires negative goodwill arising from a business
combination to be recorded as an extraordinary gain.  Statement No.142 eliminates
the amortization of goodwill and other intangibles that are determined to have
an indefinite life.  The Statement requires, at a minimum, annual impairment
tests for goodwill and other intangible assets that are determined to have an
indefinite life.

Upon adoption of these Statements, an organization is required to re-evaluate goodwill and other intangible assets that arose from business
combinations entered into before July 1, 2001.  If the recorded other intangibles
assets do not meet the criteria for recognition, they should be classified as
goodwill.  Similarly, if there are other intangible assets that meet the criteria
for recognition but were not separately recorded from goodwill, they should be
reclassified from goodwill.  An organization also must reassess the useful lives
of intangible assets and adjust the remaining amortization periods accordingly.
Any negative goodwill must be written-off.

The standards generally are required to be implemented by the Company for the
fiscal year ending March 31, 2002.  The adoption of these standards will not
have a material impact on the company's financial statements.

In June 2001, the Financial Accounting Standards Board issued Statement 143,
*Accounting for Asset Retirement Obligations.*  This Statement addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and associated retirement costs.  It
requires that the fair value of a liability for an asset retirement obligation
be recognized in the period in which it is incurred and the associated asset
retirement costs be capitalized as part of the carrying amount of the long-lived asset.  This Statement is effective for financial statements issued for
fiscal years beginning after June 15, 2002.  The Statement is not expected to
have a material effect on the Company's financial statements.

In August 2001, the Financial Accounting Standards Board issued
Statement 144,*Accounting for the Impairment or Disposal of Long-Lived Assets.*The Statement addresses financial accounting and reporting for the impairment
or disposal of long-lived assets.  It also establishes a single accounting
model for long-lived assets to be disposed of by sale, which includes long-lived assets that are part of a discontinued operation.  This Statement is
effective for financial statements issued for fiscal years and interim periods
beginning after December 15, 2001.  The Statement is not expected to have a
material effect on the Company's financial statements.

Disclosure Regarding Forward-Looking Statements

This document, including information incorporated by reference, contains and future filings by the Company on Form 10-KSB, Form 10-QSB and Form 8-K and future oral and written statements by the Company and its management may
contain, forward-looking statements about the Company and its subsidiaries which we believe are within the
meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include,
without limitation, statements with respect to anticipated future operating and financial performance, growth
opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by
management.  Words such as "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect,"
"intend," "plan" and similar expressions are intended to identify these forward-looking statements.  Forward-looking
statements by the Company and its management are based on beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and are not guarantees of future performance.  The Company
disclaims any obligation to update or revise any forward-looking statements based on the occurrence of future
events, the receipt of new information, or otherwise.  The important factors we discuss below and elsewhere in this
document, as well as other factors discussed under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in this document and identified in our filings with the SEC and those
presented elsewhere by our management from time to time, could cause actual results to differ materially from those
indicated by the forward-looking statements made in this document:

The following factors, many of which are subject to change based on various other factors beyond our control,
could cause our financial performance to differ materially from the plans, objectives, expectations, estimates and
intentions expressed in such forward-looking statements:

- the strength of the United States economy in general and the strength of the local economies in which
we conduct our operations;
- the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate
policies of the Federal Reserve Board;
- inflation, interest rate, market and monetary fluctuations;
- the timely development of and acceptance of new products and services of the Bank and the perceived
overall value of these products and services by users, including the features, pricing and quality
compared to competitors' products and services;
- the willingness of users to substitute competitors' products and services for our products and services;
- the success of the Bank in gaining regulatory approval of its products and services, when required;
- the impact of changes in financial services' laws and regulations (including laws concerning taxes,
banking, securities and insurance);
- the impact of  technological changes;
- acquisitions;
- changes in consumer spending and saving habits;
- our success at managing the risks involved in the foregoing; and
- the economic impact of the terrorist attacks, and the response of the
United States to those attacks.

Item 1.  Legal Proceedings

Not Applicable.

Item 2.  Changes in Securities

Not Applicable.

Item 3.  Defaults Upon Senior Securities

Not Applicable.

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

Not Applicable.

Item 5.  Other Information

Not Applicable.

Item 6.  Exhibits and Reports on Form 8-K

a.  Exhibits:   None.

b.  Reports on Form 8-K:   None



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.

|                        |     | COMMUNITY FINANCIAL CORPORATION                                 
|----------------------- | --- | ----------------------------------------------------------------
|                        |     |                                                                 
|Date: February 13, 2002 | By: | /s/ R. Jerry Giles                                              
|                        |     | R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer)