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

                                   FORM 10-QSB
    
          (Mark one)
              [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997  

                                        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           0-18261                 
      
                          COMMUNITY FINANCIAL CORPORATION                
         (Exact name of small business issuer as specified in its charter)

               DELAWARE                             54-1532044       
     (State of other jurisdiction of            (I.R.S. Employer
      incorporation or organization)            Identification No.)

                      38 North Central Ave., Staunton, Va. 24401            
                   (Address of principal executive offices zip code)

                                   (540) 886-0796                            
                     (Issuer's telephone number, including area code)          
         

Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

              Yes    X               No          

Number of shares of Common Stock, par value per share, $.01, outstanding at
the close of business on July 31, 1997:  1,275,373.

Transitional Small Business Disclosure Format (Check one)

              Yes                    No    X     
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                          COMMUNITY FINANCIAL CORPORATION
                                         

                                       INDEX

                                                                  

PART I.  FINANCIAL INFORMATION                                        PAGE

Item 1.  Financial Statements


         Consolidated Statements of Financial 
         Condition at June 30, 1997 (unaudited) 
         and March 31, 1997.............................................1

         Consolidated Statements of Income for the
         Three Months Ended June 30, 1997 and 1996 (unaudited)..........2

         Consolidated Statements of Cash Flows for the
         Three Months Ended June 30, 1997 and
         1996 (unaudited)...............................................3

         Notes to Unaudited Interim Consolidated 
         Financial Statements...........................................4

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations............................5


PART II. OTHER INFORMATION..............................................8   



















                               II-1

<PAGE>
                          COMMUNITY FINANCIAL CORPORATION
                   CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>                          
                                       June 30,        March 31, 
                                         1997            1997    
                                     ------------    -------------
                                      (Unaudited)                
<S>                                  <C>              <C>
ASSETS
Cash (including interest bearing                       
  deposits of approximately 
  $1,118,000 and $1,015,000)         $  4,522,495     $  4,922,213 
Securities             
  Held to maturity                      6,706,799        5,197,437
  Available for sale                    2,881,485        2,243,220
Investment in Federal Home Loan 
  Bank stock, at cost                   1,600,000        1,400,000
Loans receivable, net                 154,743,739      148,905,485
Real estate owned                          35,911          173,245
Property and equipment, net             3,556,548        3,542,108
  Accrued interest receivable                                          
  Loans                                   935,866          851,365
  Investments                             121,431          138,073
Prepaid expenses and other assets         310,015          334,036             
                                                                         
                                     $175,414,289     $167,707,182       

LIABILITIES AND STOCKHOLDERS' EQUITY 
                                   
Liabilities
Deposits                             $117,248,295     $116,594,885
Advances from Federal Home Loan                                        
  Bank                                 32,000,000       26,000,000
Advance payments by borrowers for
  taxes and insurance                      89,198          135,561       
Other liabilities                       2,026,948        1,639,740

        Total Liabilities             151,364,441      144,370,186

Stockholders' Equity
  Preferred stock $.01 par value,
    authorized 3,000,000 shares,
    none outstanding
  Common stock, $.01 par value, 
    authorized 10,000,000 shares,
    1,275,373 and 1,275,348 shares
    outstanding                            12,754           12,753 
  Additional paid in capital            4,717,177        4,716,677 
  Retained earnings                    17,583,371       17,266,745
  Net unrealized gain on securities
    available for sale                  1,736,546        1,340,821
     Total Stockholders' Equity        24,049,848       23,336,996

                                     $175,414,289     $167,707,182
</TABLE>
   See accompanying notes to consolidated financial statements.
<PAGE>                                                                       
                         COMMUNITY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                          Three Months Ended     
                                                June 30,       
                                  ------------------------------------     
                                      1997                     1996      
                                  ------------             ------------     
                                               (Unaudited)          
<S>                               <C>                     <C>        
                                                       
INTEREST INCOME
  Loans                           $3,211,542              $2,984,874
  Investment securities              122,595                 126,838        
  Other                               29,148                  32,216 
    Total interest income          3,363,285               3,143,928 

INTEREST EXPENSE
  Deposits                         1,310,796               1,243,705
  Borrowed money                     418,361                 389,197 
    Total interest expense         1,729,157               1,632,902 

NET INTEREST INCOME                1,634,128               1,511,026 

PROVISION FOR LOAN LOSSES             25,000                  32,991 

NET INTEREST INCOME AFTER
 PROVISION FOR LOAN LOSSES         1,609,128               1,478,035  

NONINTEREST INCOME
  Service charges, fees
    and commissions                  168,309                 115,903  
  Miscellaneous                          402                   1,606  
    Total noninterest
      income                          168,711                117,509           
                                            
NONINTEREST EXPENSE
  Compensation & benefits            424,217                 285,731  
  Occupancy                          114,802                  99,322  
  Data processing                    101,854                  94,056  
  Federal insurance premium           18,269                  61,631  
  Miscellaneous                      326,882                 175,083  
    Total noninterest
      expense                        986,024                 715,823  

INCOME BEFORE TAXES                  791,815                 879,721  

INCOME TAXES                         296,641                 329,934  

NET INCOME                        $  495,174              $  549,787 
                             
EARNINGS PER SHARE                $    0.390              $    0.430 
DIVIDENDS PER SHARE               $    0.140              $    0.130

</TABLE>
       See accompanying notes to consolidated financial statements.       
<PAGE>
                  COMMUNITY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> 
                                                 Three Months Ended  
                                                      June 30,     
                                              ---------------------------
                                                  1997           1996     
                                              -----------     -----------
                                                     (Unaudited)               
<S>                                            <C>              <C>     
OPERATING ACTIVITIES                                 
  Net income                                   $495,174         $549,787
  Adjustments to reconcile net income to  
   net cash provided by operating activities
     Provision for loan losses                   25,000           32,991
     Depreciation                                59,747           55,240
     Amortization of premium and accretion  
       of discount on securities, net                13           (1,976)      
     (Decrease) in net deferred loan fees       (13,848)          (6,718)      
     Increase in deferred income taxes           15,945           30,604
     Decrease (increase) in other assets        (93,496)          49,011 
     Increase (decrease) in other liabilities   324,900          106,007  
     (Gain)loss on sale of loans                  4,606             (490)
     Proceeds from sale of loans                723,500          248,000
     Loans originated for resale               (786,500)        (281,000) 
   Net cash provided by operating activities    755,041          781,456 

INVESTING ACTIVITIES
  Proceeds from maturities of held for
    investment securities                        250,000         500,000
  Purchases of investment securities          (1,759,375)       (498,281)
  Net decrease (increase) in loans            (5,837,844)        203,689 
  Purchases of property and equipment            (82,901)        (10,015)
  Redemption (purchase) of FHLB stock           (200,000)        100,000
    Net cash provided (absorbed) by 
      investing activities                    (7,630,120)        295,393 
     
FINANCING ACTIVITIES
  Dividends paid                                (178,549)       (165,256)
  Net increase (decrease) in deposits            653,410         506,358
  Proceeds from advances and other 
   borrowed money                              8,000,000      26,000,000
  Repayments of advances and other
   borrowed money                             (2,000,000)    (28,000,000)
  Proceeds from issuance of common stock             500           9,400      
Net cash provided (absorbed) by  
  financing activities                         6,475,361      (1,649,498) 

INCREASE (DECREASE) IN CASH AND CASH                    
  EQUIVALENTS                                   (399,718)       (572,649)

CASH AND CASH EQUIVALENT-beginning of period   4,922,213       3,673,085
CASH AND CASH EQUIVALENTS-end of period       $4,522,495      $3,100,436  
</TABLE>

   See accompanying notes to consolidated financial statements. 

<PAGE>

                          COMMUNITY FINANCIAL CORPORATION
           NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                    JUNE 30, 1997


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-Q and Rule
10-01 of 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") and its
wholly-owned subsidiary, Community Bank (the "Bank").  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 months ended June 30, 1997, are not
necessarily indicative of the results that may be expected for the year
ending March 31, 1998.

NOTE 2. - EARNINGS PER SHARE
  
Earnings per share is computed based on the weighted average number of shares
of common stock outstanding during each period including the assumed exercise
of dilutive stock options, and is retroactively adjusted for stock dividends
and stock splits. Earnings per share for the three months ended June 30, 1997
and 1996 have been determined by dividing net income by the weighted average
number of shares of common stock outstanding during these periods (1,275,355
and 1,270,436, respectively). 

NOTE 3. - STOCKHOLDERS' EQUITY

The following table presents the Bank's capital levels at June 30, 1997
relative to the requirements applicable under the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ('FIRREA'):
<TABLE>
<CAPTION>
                      Amount     Percent    Actual      Actual      Excess     
                     Required   Required    Amount      Percent     Amount     
                   ----------   ---------  ---------    -------   -----------

<S>                <C>          <C>       <C>           <C>       <C>          
        
Tangible Capital   $2,621,000   1.50%     $20,288,000   11.61%    $17,667,000
Core Capital        5,242,000   3.00       20,288,000   11.61      15,046,000
Risk-based Capital  9,640,000   8.00       21,062,000   17.48      11,422,000

</TABLE>

<PAGE>
NOTE 3. - STOCKHOLDERS' EQUITY (cont.)

Capital distributions by the Bank are limited by federal regulations
("Capital Distribution Regulation").  Capital distributions are defined to
include, in part, dividends, stock repurchases and cash-out mergers.  The
Capital Distribution Regulation permits a "Tier 1" institution to make capital
distributions during a calendar year up to 100% of its net income to date plus
the amount that would reduce by one-half its surplus capital ratio at the 
beginning of the calendar year.  Any distributions in excess of that amount
require prior notice to the Office of Thrift Supervision ("OTS") with the
opportunity for the OTS to object to the distribution. A Tier 1 institution is
defined as an institution that has, on a pro forma basis after the proposed
distribution, capital equal to or greater than the OTS fully phased-in capital
requirement and has not been deemed by the OTS to be "in need of more than
normal supervision".  The Bank is currently classified as a Tier 1 institution
for these purposes.  The Capital Distribution Regulation requires that
institutions provide the applicable OTS District Director with a 30-day
advance written notice of all proposed capital distributions whether or not
advance approval is required by the regulation. 


NOTE 4. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS

Total interest paid for the three months ended June 30, 1997 and 1996 was
$1,723,894 and $1,704,935, respectively.  There were no income taxes paid for
the three months ended June 30, 1997 and 1996.  
                              
                                  
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

FINANCIAL CONDITION

The Company's total assets increased $7.7 million to $175.4 million at June
30, 1997, due primarily to a increase in loans of $5.8 million. The increase
in loans receivable was due primarily to the origination of variable rate
mortgage loans and consumer loans. Deposits increased $650,000 to $117.2
million at June 30, 1997, from $116.6 million at March 31, l997 while       
Federal Home Loan Bank advances increased during the same period from $26.0
million to $32.0 million. The increase in deposits and advances was used
primarily to fund the increase in loans. Stockholders' equity increased to
$24.1 million at June 30, 1997, from $23.3 million at March 31, 1997, due
primarily to earnings for the three month period ended June 30, 1997 and an
adjustment in the market value of Federal Home Loan Mortgage Corporation
stock, which was partially offset by a payment of $0.14 per share in cash
dividends.

At June 30, 1997, the Bank's non-performing assets totalled $678,000 or 0.39%
of assets compared to $676,000 and .40% of assets at March 31, 1997. At June 
30, 1997 the Company's non-performing assets were comprised of two single
family residential rental properties which were more than ninety days past due 
and various consumer loans which includes one lending relationship of
approximately $316,000 secured by classic automobiles and a second mortgage on
real estate for which an allowance of $200,000 has been made. Based on current
market values of the collateral securing these loans, management anticipates
no significant losses in excess of the reserves for losses previously <PAGE>
<PAGE>

recorded.  Due to an uncertain real estate market and the economy in general
no assurances can be given that the Company's level of non-performing assets
may not increase in the future.

The Company maintains an allowance for loan losses to provide for estimated
potential losses in its 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
classifications system.  Management believes that the loan loss reserve is
adequate at June 30, 1997.  Although management believes it uses the best
information available, future adjustments to reserves may be necessary.

Historically, the Bank has maintained its liquid assets above the minimum
requirements imposed by federal regulations and at a level believed adequate
to meet requirements of normal daily activities, repayment of maturing debt
and potential deposit outflows.  Cash flow projections are regularly reviewed
and updated to assure that adequate liquidity is provided.  As of June 30,
1997, the Bank's liquidity ratio (liquid assets as a percentage of net
withdrawable savings and current borrowings) was 7.92%, which exceeds the
regulatory requirement.   

RESULTS OF OPERATIONS

Three Months Ended June 30, 1997 and 1996.
----------------------------------------------

General.  Net income for the three months ended June 30, 1997 was $495,000
compared to $550,000 for the three months ended June 30, 1996, due
primarily to an increase in noninterest expense which was offset in part by an
increase in net interest income. Income before taxes decreased to $792,000 for
the three months ended June 30, 1997 from $880,000 for the three months
ended June 30, 1996.

Interest Income.   Total interest income increased to $3.4 million for the
three months ended June 30, 1997, from $3.1 million for the three months ended
June 30, 1996, due to an increase in the balances of loans and investments for
the three months ended June 30, 1997 as compared to the period ended June 30,
1996.  The average yield earned on interest-earning assets was 8.25% for the
three months ended June 30, 1997 compared to 8.25% for the three months ended
June 30, 1996.

Interest Expense.  Total interest expense increased to $1.7 million for the
quarter ended June 30, 1997, from $1.6 million for the quarter ended June 30,
1996. Interest on deposits increased to $1.3 million for the quarter ended
June 30, 1997 from $1.2 million for the quarter ended June 30, 1996 due
primarily to an increase in deposits for the quarter ended June 30, 1997.
Interest expense on borrowed money increased to $418,000 for the quarter ended
June 30, 1997, from $389,000 for the quarter ended June 30, 1996, due to an
increase in  average borrowings.  The average rate paid on interest-bearing
liabilities was 4.74% for the three months ended June 30, 1997 compared to
4.82% to the three months ended June 30, 1996.          
                                                                               
                         <PAGE>
<PAGE>

Provision for Loan Losses.  The provision for loan losses decreased 
to $25,000 for the three months ended June 30, 1997, from $33,000 for the
three months ended June 30, 1996.                                              
                                                                         
Noninterest Income.  Noninterest income increased to $169,000 for the three
months ended June 30, 1997, from $118,000 for the three months ended
June 30, 1996 due primarily to both an increase in checking account charges
which is related to an increase in account volume and an increase in the sale
of fixed rate mortgage loans.

Noninterest Expenses.  Noninterest expense increased to $986,000 for the three
months ended June 30, 1997, from $716,000 for the three months ended
June 30, 1996. The increase in noninterest expense is primarily attributable
to an increase in compensation, marketing and other expenses related to the
opening of a branch location on April 9, 1997 in Virginia Beach, Virginia. 
  
Taxes.  Taxes decreased to $297,000 for the three months ended June 30,
1997, from $330,000 for the three months ended June 30, 1996, due to the
decrease in income before taxes.   

Forward-Looking Statements

This Quarterly Report on Form 10-QSB contains certain forward-looking
statements with respect to the financial condition, results of operations and
business of Community.  These forward-looking statements involve certain risks
and uncertainties.  When used in this Quarterly Report on Form 10-QSB or
future filings by the Company with the Securities and Exchange Commission, in
the Company's press releases or other public or shareholder communications, or
in oral statements made with the approval of an authorized executive officer,
the words or phrases "will likely result", "are expected to", "will continue",
"is anticipated", "estimate", "project", "believe" or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.  The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made, and to advise readers that
various factors including regional and national economic conditions, changes
in levels of market interest rates, credit risks of lending activities, and
competitive and regulatory factors could affect the Company's financial
performance and could cause the Company's actual results for future periods to
differ materially from those anticipated or projected.

The Company does not undertake and specifically disclaims any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.<PAGE>
<PAGE>

                            PART II.  OTHER INFORMATION


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

	   Exhibit 27 - Financial Data Schedule

     <PAGE>
<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.


                                   COMMUNITY FINANCIAL CORPORATION

Date: _________ __, 1997                               
                                   By: /s/ R. Jerry Giles
                                       -------------------------------
                                        R. Jerry Giles
                                        Chief Financial Officer
                                        (Duly Authorized Officer)







































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                               EXHIBIT INDEX

Exhibit No.            Description        


27                     Financial Data Schedule.

         
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