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                 COMMUNITY FINANCIAL CORPORATION
                       1996 INCENTIVE PLAN


                            Article 1

                           DEFINITIONS


     1.01 Affiliate means any "subsidiary" or "parent corporation" (within
the meaning of Section 424 of the Code) of the Company.

     1.02 Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Grant issued to such Participant.

     1.03 Board means the Board of Directors of the Company.

     1.04 Change of Control means and shall be deemed to have taken place
if: (i) a third person, including a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, who after the effective date of the Plan
becomes the beneficial owner of shares of the Company having 20 percent or
more of the total number of votes that may be cast for the election of
Directors of the Company; or, (ii) as the result of, or in connection with,
any cash tender or exchange offer, merger or other business combination, sale
of assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were Directors of the Company
before the Transaction shall cease to constitute a majority of the Board of
the Company or any successor of the Company.

     1.05 Change of Control Date is the date on which an event described in
(i) or (ii) of Section 1.04 occurs.

     1.06 Code mans the Internal Revenue Code of 1986, and any amendments
thereto.

     1.07 Committee means the Stock Option Committee of the Board.

     1.08 Common Stock means the Common Stock of the Company.

     1.09 Company means Community Financial Corporation, a Delaware
corporation.

     1.10 Fair Market Value means, on any given date, the average of the bid
and asked prices at closing of a share of Common Stock on the over-the-counter
market on such day or, if the Common Stock was not traded on such day, then on
the next preceding day that the Common Stock was traded on such exchange, all
as reported by such source as the Committee may select.

     1.11 Grant means the grant of an Option.

     1.12 Incentive Stock Option mans an Option that is intended to qualify
as an "incentive stock option" under Section 422 of the Code.

     1.13 Non-Qualified Stock Option means an Option other than an Incentive
Stock Option.

     1.14 Option mans a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.

     1.15 Option Price means the price per share for Common Stock purchased
on the exercise of an Option as provided in Article VI.

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     1.16 Participant mens a director of the Company or an employee of the
Company or of a Subsidiary who satisfies the requirements of Article IV and is
selected by the Committee to receive a Grant.

     1.17 Plan means the Community Financial Corporation 1996 Incentive
Plan.

     1.18 Rule 16b-3 means Rule 16b-3, as promulgated by the Securities and
Exchange Commission under Section 16(b) of the Securities Exchange Act of
1934, as amended from time to time.

     1.19 Securities Broker means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
option pursuant to Section 8.04 hereof.

     1.20 Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations in the chain (other than the last corporation) owns stock
possessing at least 50 percent of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

                            Article II

                             PURPOSES

     The Plan is intended to assist the Company in recruiting and retaining
directors and key employees with ability and initiative by enabling directors
and employees who contribute significantly to the Company or an Affiliate to
participate in its future success and to associate their interests with those
of the Company and its shareholders.  The Plan is intended to permit the
issuance of Options qualifying as Incentive Stock Options or Non-Qualified
Stock Options as designated by the Committee at time of grant.  No Option that
is intended to be an Incentive Stock Option, however, shall be invalid for
failure to qualify as an Incentive Stock Option under Section 422 of the Code
but shall be treated as a Non-Qualified Stock Option.

                           Article III

                          ADMINISTRATION

     The Plan shall be administered by the Committee.  The Committee shall
have authority to issue Grants upon such terms (not inconsistent with the
provisions of this Plan) as the Committee may consider appropriate.  The terms
of such Grants may include conditions (in addition to those contained in this
Plan) on the exercisability of all or any part of an Option.  In addition, the
Committee shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this
Plan.

     The express grant in this Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. 
Any decision made, or action taken, by the Committee or in connection with the
administration of this Plan shall be final and conclusive.  All expenses of
administering this Plan shall be borne by the Company.

                            Article IV

                           ELIGIBILITY

     4.01 General.  Any employee of the Company or of any Subsidiary
(including any corporation that becomes a Subsidiary after the adoption of
this Plan) who, in the judgment of the Committee, has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company or a Subsidiary may receive one or more Grants.

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Directors of the Company are eligible to participate in this Plan.  Except as
provided in Article XII, a person who is a member of the Committee may not be
issued Grants while he is a member of the Committee.

     4.02 Grants.  The Committee will designate individuals to whom Grants
are to be issued and will specify the number of shares of Common Stock subject
to each such Grant.  All Grants issued under this Plan shall be evidenced by
Agreements which shall be subject to applicable provisions of this Plan and to
such other provisions as the Committee may adopt.  No Participant may be
granted Options that are Incentive Stock Options (under all Incentive Stock
Option Plans of the Company and Affiliates) which are first exercisable in any
calendar year  for stock having an aggregate Fair Market Value (determined as
of the date an Option is granted) exceeding $100,000.

     4.03 Designation of Option as an Incentive Stock Option or a
Non-Qualified Stock Option.  The Committee will designate at the time an
Option is granted whether the Option is to be treated as an Incentive Stock
Option or a Non-Qualified Stock Option.  In the absence, however, of any such
designation, such option shall be treated as a Non-Qualified Stock Option.

                            Article V

                      STOCK SUBJECT TO PLAN

     The maximum number of shares of Common Stock available for Grants under
the Plan shall be 60,000.  Such maximum number of shares of Common Stock is
subject to adjustment as provided in Article IX.  Shares of Common Stock
subject to Grants under the Plan may be authorized but previously unissued
shares of Common Stock or previously issued shares of Common Stock reacquired
by the Company.

     If any option terminates without being exercised, shares of Common Stock
subject to such Grants shall be available for distribution in connection with
Grants under the Plan.

                            Article VI

                           OPTION PRICE

     The price per share for Common Stock purchased on the exercise of an
Option shall be fixed by the Committee on the date of Grant; provided,
however, that in the case of an Option that is an Incentive Stock Option, the
price per share shall not be less than the Fair Market Value on such date.

                           Article VII

                       EXERCISE OF OPTIONS

     7.01 Maximum Option Period.  The period in which an Option may be
exercised shall be determined by the Committee on the date of grant; provided,
however that an Incentive Stock Option shall not be exercisable after the
expiration of 10 years from the date the Incentive Stock Option was granted.

     7.02 Nontransferability.  Any Option granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.  In
the event of any such transfer, the Option must be transferred to the same
person or persons, trust or estate.  During the lifetime of the Participant to
whom an Incentive Stock Option is granted, the Option may be exercised only by
the Participant.  No right or interest of a Participant in any Option shall be
liability for, or subject to, any lien, obligation, or liability of such
Participant.

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     7.03 Employee Status.  For purposes of determining the applicability of
Section 422 of the Code (relating to Incentive Stock Options), or in the vent
that the terms of any Grant provide that it may be exercised only during
employment or within a specified period of time after termination of
employment, the Committee may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability, or other
reasons shall not be deemed interruptions of continuous employment.

                           Article VIII

                        METHOD OF EXERCISE


     8.01 Exercise.  Subject to the provisions of Articles VII and X, an
Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Committee shall
determine.  An option granted under this Plan may be exercised with respect to
any number of whole shares less than the full number for which the Option
could be exercised.  Such partial exercise of an Option shall not affect the
right to exercise the Option from time to time in accordance with this Plan
with respect to remaining shares subject to the Option.

     8.02 Payment.  Unless otherwise provided by the Agreement, payment of
the Option Price shall be made in cash.  If the Agreement provides, payment of
all or part of the Option Price may be made by withholding shares of Common
Stock upon exercise of an Option or by surrendering already owned shares of
Common Stock to the Company, provided the shares withheld or surrendered have
a Fair Market Value (determined as of the day preceding the date of exercise)
that is not less than such price or part thereof.  In addition, the Committee
may establish such payment or other terms as it may deem to be appropriate and
consistent with these purposes.

     8.03 Shareholder Rights.  No participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date he
exercises such Option.

     8.04 Cashless Exercise.  To the extent permitted under the applicable
laws and regulations, at the request of the Participant and with the consent
of the Committee, the Company agrees to cooperate in a "cashless exercise" of
the Option.  The cashless exercise shall be effected by the Participant
delivering to the Securities Broker instructions to exercise all or part of
the Option, including instructions to sell a sufficient number of shares of
Common Stock to cover the costs and expenses associated therewith.

                            Article IX

              ADJUSTMENT UPON CHANGE IN COMMON STOCK

     Should the Company effect one or more (x) stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes
in capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other
such distribution of assets to shareholders; or (z) direct or indirect
assumptions and/or conversions of outstanding Options due to an acquisition of
the Company, then the maximum number of shares as to which Grants may be
issued under this Plan shall be proportionately adjusted and their terms shall
be adjusted as the Committee shall determine to be equitably required,
provided that the number of shares subject to any Grant shall always be a
whole number.  Any determination made under this Article IX by the Committee
shall be final and conclusive.

     The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or

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obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to any Grant.

                            Article X

      COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

     No Grant shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable Federal
and state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company's shares may be listed.  The Company may rely on an opinion of its
counsel as to such compliance.  Any share certificate issued to evidence
Common Stock for which a Grant is exercised or an Award is issued may bear
such legends and statements as the Committee may deem advisable to assure
compliance with Federal and state laws and regulations.  No Grant shall be
exercisable, no Common Stock shall be issued, no certificate for shares shall
be delivered, and no payment shall be made under this Plan until the Company
has obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.

                            Article XI

                        GENERAL PROVISIONS

     11.01     Effect on Employment.  Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or a Subsidiary or in any way affect any right and power of the
Company or a Subsidiary to terminate the employment of any employee at any
time with or without assigning a reason therefor.

     11.02     Change of Control.  Notwithstanding any other provision in this
Plan to the contrary, unless the Committee provides otherwise in an Agreement,
a Grant may be exercised immediately in full upon a Change of Control.

     11.03     Rules of Construction.  Headings are given to the articles and
sections of this Plan for ease of reference.  The reference to any statute,
regulation, or other provision of law shall be construed to refer to any
amendment to or successor of such provision of law.

     11.04     Amendment.  The Board may amend or terminate this Plan from
time to time; provided, however, that no amendment may become effective until
shareholder approval is obtained if the amendment (i) materially increases the
aggregate number of shares that may be issued pursuant to Options, (ii)
materially increases the benefits to Participants under the Agreement, or
(iii) materially changes the class of employees eligible to become
Participants.  No amendment shall, without a Participant's consent, adversely
affect any rights of such Participant under any Grant outstanding at the time
such amendment is made, except such an amendment made to cause the Plan to
qualify for the Rule 16b-3 exemption.  No amendment shall be made if it would
disqualify the Plan from the exemption provided by Rule 16b-3. The Committee
may amend the terms of any Grant theretofore issued under this Plan,
prospectively or retrospectively, and include  in such amendment the right of
the Committee to pay a Participant cash in lieu of shares of Common Stock upon
the termination (by exercise or otherwise) of an Option, but no such amendment
shall impair the rights of any Participant without the Participant's consent,
except such an amendment made to cause the Plan, or Grant to qualify for the
exemption provided by Rule 16b-3.

     11.05     Duration of Plan.  No Grant may be issued under this Plan
before May 22, 1996, or after May 21, 2006.

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     11.06     Shareholder Approval.  This Plan has been approved by the Board
of Directors of the Company and shall be effective as of May 22, 1996 subject,
however, to approval by the shareholders of the Company entitled to vote at
the 1996 Annual Meeting of Shareholders.

                           Article XII

                         DIRECTOR OPTIONS


     On the date the shareholders of the Company approve the Plan, each
director of the Company who is not also a full time employee of the Company
shall be granted a Non-Qualified Stock Option for 2,500 shares of Common
Stock.  The Option Price shall be the Fair Market Value on the date of grant. 
Such Options shall expire ten years after the date of grant or ninety (90)
days after the grantee ceases to serve as a director of the Company, whichever
occurs first.

     To the extent shares of Common Stock are available under the Plan, a
Non-Qualified Stock Option for 2,500 shares of Common Stock shall be granted
to any individual who is not a full time employee of the Company and who
becomes a director of the Company after the shareholders of the Company
approve the Plan.  Any such option shall be granted on the date any such
individual is first appointed or elected to the Board.  The Option Price shall
be the Fair Market Value on the date of grant.  Any such option shall expire
ten years after the date of grant or ninety (90) days after the grantee ceases
to serve as a director of the Company, whichever occurs first.