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

**FORM 10-Q**

|   | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934        
|-- | ----------------------------------------------------------------------------------------
|   | For the quarterly period ended June 30, 2004                                            
|OR
|   | 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 of
incorporation or organization) | (I.R.S. Employer
Identification No.)

---

---

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), (2) and has
been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
  Yes  
 No

Number of shares of Common Stock, par value $.01 per share, outstanding at the close of business on August 11, 2004:  2,078,906.

COMMUNITY FINANCIAL CORPORATION
INDEX

|PART I.       | FINANCIAL INFORMATION                                                                               |   
|------------- | --------------------------------------------------------------------------------------------------- | --
|Item 1.       | Consolidated Financial Statements                                                                   |   
|              | Consolidated Statements of Financial Condition
at June 30, 2004 (unaudited) and March 31, 2004      | 3 
|              | Consolidated Statements of Income for the
Three Months Ended June 30, 2004 and 2003 (unaudited)     | 4 
|              | Consolidated Statements of Cash Flows for the
Three Months Ended June 30, 2004 and 2003 (Unaudited) | 5 
|              | Notes to Unaudited Interim Consolidated
Financial Statements                                        | 6 
|Item 2.       | Management's Discussion and Analysis of Financial Condition
and Results of Operations               | 9 
|Item 3.       | Quantitative and Qualitative Disclosures About Market Risk                                          | 13
|Item 4.       | Controls and Procedures                                                                             | 13
|PART II.      | OTHER INFORMATION                                                                                   | 14
|Exhibit Index | 16                                                                                                 

Part I. Financial Information

Item 1. Financial Statements

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                 | June 30      | March 31    
|------------------------------------------------------------------------------------------------ | ------------ | ------------
|                                                                                                 | 2004         | 2004        
|                                                                                                 | (Unaudited) 
|ASSETS                                                                                          
|Cash (including interest-bearing
  deposits of approximately   $1,392,000 and $1,658,000)        | $  1,471,603 | $  4,493,661
|Securities                                                                                      
|Held to maturity                                                                                 | 28,157,716   | 20,648,291  
|Available for sale                                                                               | 13,754,129   | 15,012,833  
|Restricted investment in Federal
  Home Loan Bank stock, at cost                                 | 3,000,000    | 2,300,000   
|Loans receivable, net of allowance
  for loan losses of $2,787,287 and  $2,645,765               | 293,773,489  | 279,301,167 
|Real estate owned                                                                                | 464,478      | 621,363     
|Property and equipment, net                                                                      | 7,238,726    | 7,280,604   
|Accrued interest receivable                                                                     
|Loans                                                                                            | 1,066,577    | 1,023,935   
|Investments                                                                                      | 349,935      | 293,194     
|Prepaid expenses and other assets                                                                | 5,952,633    | 5,972,367   
|Total Assets                                                                                     | $355,229,286 | $336,947,415
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                            
|Liabilities                                                                                     
|Deposits                                                                                         | $264,853,180 | $260,230,949
|Advances from Federal Home Loan Bank                                                             | 60,000,000   | 46,000,000  
|Securities sold under agreement to repurchase                                                    | 548,711      | 428,920     
|Advance payments by borrowers for taxes and insurance                                            | 63,928       | 136,316     
|Other liabilities                                                                                | 590,656      | 882,695     
|Total Liabilities                                                                                | 326,056,475  | 307,678,880 
|Stockholders' Equity                                                                            
|Preferred stock $.01 par value,
    authorized 3,000,000 shares,
    none outstanding            | ---          | ---         
|Common stock, $.01 par value,
    authorized 10,000,000 shares,
    2,078,906 shares outstanding | 20,789       | 20,789      
|Additional paid in capital                                                                       | 4,230,512    | 4,230,512   
|Retained earnings                                                                                | 23,701,181   | 23,017,148  
|Accumulated other comprehensive
    income                                                       | 1,220,329    | 2,000,086   
|Total Stockholders' Equity                                                                       | 29,172,811   | 29,268,535  
|Total Liabilities and
          Stockholders' Equity                                             | $355,229,286 | $336,947,415

See accompanying notes to unaudited interim consolidated financial statements.

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

|                                                     | Three Months EndedJune 30,
|---------------------------------------------------- | --------------------------
|                                                     | 2004                      
|                                                     | (Unaudited)               
|INTEREST AND DIVIDEND INCOME                        
|Loans                                                | $4,106,689                
|Investment securities                                | 246,047                   
|Other                                                | 214,297                   
|Total interest income                                | 4,567,033                 
|INTEREST EXPENSE                                    
|Deposits                                             | 1,197,432                 
|Borrowed money                                       | 151,722                   
|Total interest expense                               | 1,349,154                 
|NET INTEREST INCOME                                  | 3,217,879                 
|PROVISION FOR LOAN LOSSES                            | 164,115                   
|NET INTEREST INCOME AFTER
 PROVISION FOR LOAN LOSSES | 3,053,764                 
|NONINTEREST INCOME                                  
|Service charges, fees
    and commissions            | 547,134                   
|Gain on sale of subsidiary                           | --                        
|Miscellaneous                                        | 130,074                   
|Total noninterest income                             | 677,208                   
|NONINTEREST EXPENSE                                 
|Compensation & benefits                              | 1,378,457                 
|Occupancy                                            | 306,265                   
|Data processing                                      | 317,615                   
|Federal insurance premium                            | 9,838                     
|Miscellaneous                                        | 408,318                   
|Total noninterest expense                            | 2,420,493                 
|INCOME BEFORE TAXES                                  | 1,310,479                 
|                                                    
|INCOME TAXES                                         | 418,555                   
|NET INCOME                                           | $  891,924                
|BASIC EARNINGS PER SHARE                             | $    0.43                 
|DILUTED EARNINGS PER SHARE                           | $    0.41                 
|DIVIDENDS PER SHARE                                  | $    0.10                 

See accompanying notes to unaudited interim consolidated financial statements.

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWSThree Months Ended 
June 302004
2003(Unaudited)OPERATING ACTIVITIESNet income
$  891,924
$  997,133Adjustments to reconcile net income to
   net cash provided (absorbed) by operating
   activitiesProvision for loan losses
164,115
147,395Depreciation
139,846
206,685Amortization of premium and accretion          of discount on securities, net
3,255
3,538Increase(decrease) in net deferred
       loan fees
14,203
(15,061)Increase in deferred income taxes
2,489
14,001Increase in other assets
(79,649)
(1,366,774)Increase in other liabilities112,031
350,939Gain on sale of subsidiary
--
(241,066)Gain on sale of loans
--
(86,633)Proceeds from sale of loans
--
22,675,246Loans originated for resale
--
(24,745,863)Net cash provided (absorbed) by
         operating activities
1,248,214
(2,060,460)INVESTING ACTIVITIESProceeds from maturities of held to
    maturity securities
2,390,000
4,500,000Purchases of investment securities
(9,902,680)
(9,145,625)Net increase in loans
(14,650,640)
(3,816,129)Purchases of property and equipment
(97,968)
(397,234)(Purchase) redemption of FHLB stock
(700,000)
300,000Proceeds from sale of subsidiary
--
1,749,144Decrease in Real Estate Owned
156,885
189,148Net cash absorbed by investing      activities
 (22,804,403)
(6,620,696)FINANCING ACTIVITIESDividends paid
(207,891)
(185,791)Net increase in deposits
4,622,231
1,640,622Proceeds from advances and other    borrowed money
93,099,050
64,088,281Repayments of advances and other
   borrowed money
(78,979,259)
(58,255,381)Proceeds from issuance of common stock
--
116,250Net cash provided by
   financing activities
18,534,131
7,403,981DECREASE IN CASH AND CASH EQUIVALENTS
(3,022,058)
(1,277,175)CASH AND CASH EQUIVALENTS-beginning of period
4,493,661
4,836,129CASH AND CASH EQUIVALENTS-end of period
$1,471,603
$3,558,954See accompanying notes to unaudited interim consolidated financial statements

COMMUNITY FINANCIAL CORPORATIONNOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTSJUNE 30, 2004

NOTE 1. - BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q 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"). Community First Mortgage Corporation was sold effective June 30,
2003.  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, 2004, are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2005.

Note 2. - Stock-Based Compensation Plan

****At June 30, 2004, the Company had a stock-based employee compensation plan.
The Company accounts for the plan under the recognition and measurement
principles of APB Opinion No. 25, *Accounting for Stock Issued to Employees*,
and related Interpretations.  No stock-based employee compensation cost is
reflected in net income, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant.  The Company applies the fair value recognition provisions of
SFAS No. 123, *Accounting for Stock-Based Compensation*, to stock-based employee
compensation. The value of each grant is estimated at the grant date using the
Black-Scholes option-pricing model. No proforma compensation expense is
disclosed for the quarters ended June 30, 2004 and 2003 as no options were
granted during those periods.

NOTE 3. - 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

|                                         | June 30, 2004 | June 30, 2003
|---------------------------------------- | ------------- | -------------
|                                         |               | Weighted     
|                                         |               | Average      
|                                         | Income        | Shares       
|Basic EPS                               
|Income available to
 common stockholders | $891,924      | 2,078,906    
|                                        
|Effect of Dilutive
 Securities          
|Options                                  | ---           | 81,784       
|Diluted EPS                             
|Income available to
 common stockholders | $891,924      | 2,160,690    
|                                         |              

NOTE 4. - STOCKHOLDERS' EQUITY

The following table presents the Bank's regulatory capital levels at June 30,
2004:

|                   | Amount      | Percent  | Actual      | Actual  | Excess     
|------------------ | ----------- | -------- | ----------- | ------- | -----------
|                   | Required    | Required | Amount      | Percent | Amount     
|Tangible Capital   | $ 4,827,000 | 1.50%    | $24,956,000 | 7.75%   | $20,129,000
|Core Capital       | 12,873,000  | 4.00     | 24,956,000  | 7.75    | 12,083,000 
|Risk-based Capital | 19,462,000  | 8.00     | 28,212,000  | 11.60   | 8,750,000  



NOTE 5. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS

Total interest paid for the three months ended June 30, 2004 and 2003 was
$1,398,686 and $1,501,445, respectively. Total income taxes paid for the three
months ended June 30, 2004 and 2003 was $0 and $19,810.

NOTE 6. - 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 June 30, 2004 and 2003:

|                                                                    | Three months Ended June 302004
2003(Amounts in thousands)Net income
$891,924
 $997,133Other comprehensive income,
  net of taxUnrealized gains(losses)on securities:Unrealized holding gains (losses)
        arising during the period
(779,757)
71,917Total comprehensive income
$112,167
$1,069,050 |            | 2004 | 2003 | (Amounts in thousands) | Net income | $891,924 | $997,133 | Other comprehensive income,
  net of tax | Unrealized gains(losses)on securities: | Unrealized holding gains (losses)
        arising during the period | (779,757) | 71,917 | Total comprehensive income | $112,167 | $1,069,050
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------- | ---- | ---- | ---------------------- | ---------- | -------- | -------- | ---------------------------------------- | -------------------------------------- | ------------------------------------------------------------------- | --------- | ------ | -------------------------- | -------- | ----------
|                                                                    | 2004                                                                                                                                                                                                                                                                                                   | 2003      
|(Amounts in thousands)                                             
|Net income                                                          | $891,924                                                                                                                                                                                                                                                                                               | $997,133  
|Other comprehensive income,
  net of tax                           
|Unrealized gains(losses)on securities:                             
|Unrealized holding gains (losses)
        arising during the period | (779,757)                                                                                                                                                                                                                                                                                              | 71,917    
|Total comprehensive income                                          | $112,167                                                                                                                                                                                                                                                                                               | $1,069,050

Note 7. - Defined Benefit Pension Plan

The Company has a non-contributory defined benefit pension plan for
which the components of net periodic benefit cost are as follows:

|                                        | Three months Ended June 30
|--------------------------------------- | --------------------------
|                                        | 2004                      
|Service cost                            | $46,938                   
|Interest cost                           | 25,427                    
|Expected return on plan assets          | (25,323)                  
|Amortization of net asset at transition | -                         
|Recognized net actuarial loss           | 2,229                     
|                                        | $49,271                   

As disclosed in the Company's Form 10-KSB for the year ended March 31,
2004, a contribution of $206,000 to its pension plan is expected for the
current fiscal year. As of June 30, 2004, no contributions have been made. The
Company anticipates making all required contributions prior to March 31, 2005.



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



FINANCIAL CONDITION

The Company's total assets increased $18.3 million to $355.2 million at June
30, 2004 from $336.9 million at March 31, 2004 due to increases in securities
of $6.3 million and loans receivable of $14.5 million. These increases were
funded with deposits which increased $4.6 million and borrowings which
increased $14.0 million at June 30, 2004, from March 31, 2004. The increase in
deposits was due to an increase in checking accounts of $400,000 and time
deposits of $6.2 million which was offset by a decrease in savings accounts of
$1.4 million and money market accounts of $600,000. Stockholders' equity
decreased $96,000 to $29.2 million at June 30, 2004, from $29.3 million at
March 31, 2004, due to a decrease in the net unrealized gain on securities
available for sale and a payment of $0.10 per share in cash dividends. The
decrease to stockholders' equity was partially offset by earnings for the
three month period ended June 30, 2004.

At June 30, 2004, non-performing assets totaled approximately $2.6 million or
..74% of assets compared to $1.7 million or .51% of assets at March 31, 2004.
Non-performing assets at June 30, 2004 were comprised primarily of loans 90
days or more delinquent which totaled $2.2 million. Loans 90 days or more
delinquent at June 30, 2004 included one commercial real estate loan of $1.1
million which as of July 31, 2004 is current as to principal and interest. At
June 30, 2004, our allowance for loan losses to non-performing loans was
106.5% and to total loans was .94%. Based on current market values of the
properties securing these loans, management anticipates no significant losses
in excess of the allowance for losses previously recorded.

****As of June 30, 2004, there were also $2.0 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 loan categories. These loans are comprised primarily of commercial real estate loans. No individual loan in this category has a
balance that exceeds $275,000.

CRITICAL ACCOUNTING POLICIES

General

The Company's financial statements are prepared in accordance with accounting
principals generally accepted in the United States (GAAP). The financial
information contained within our statements is, to a significant extent,
financial information that is based on measures of the financial effects of
transactions and events that have already occurred. A variety of factors could
affect the ultimate value that is obtained either when earning income,
recognizing an expense, recovering an asset or relieving a liability. We use
historical loss factors as one factor in determining the inherent loss that
may be present in our loan portfolio. Actual losses could differ significantly
from the historical factors that we use. In addition, GAAP itself may change
from one previously acceptable method to another method. Although the
economics of our transactions would be the same, the timing of events that
would impact our transactions could change.

Allowance for Loan Losses

The allowance for loan losses is an estimate of the losses that may be
sustained in our loan portfolio. The allowance is based on two basic
principles of accounting: (i) Statement of Financial Accounting Standard
("SFAS") No.5, Accounting for Contingencies, which requires that losses be
accrued when they are probable of occurring and estimable and (ii) SFAS 114,
Accounting by Creditors for Impairment of a Loan, which requires that losses
be accrued based on the differences between the value of collateral, present
value of future cash flows or values that are observable in the secondary
market and the loan balance.

We maintain an allowance for loan losses to provide for estimated probable
losses in our loan portfolio. Management determines the level of allowances
based on loan performance, the value of the collateral, economic and market
condit+ions, 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 allowance is adequate at June
30, 2004. Although management believes it uses the best information available,
future adjustments to the allowance may be necessary.

LIQUIDITY AND CAPITAL RESOURCES

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 June 30, 2004, the Bank's liquidity ratio (liquid
assets as a percentage of net withdrawable savings and current borrowings) was
12.4%.

Our principal sources of funds are customer deposits, advances from the
Federal Home Loan Bank of Atlanta, amortization and prepayment of loans,
proceeds from the sale of loans and funds provided from operations. Management
maintains investments in liquid assets based upon its assessment of (i) our
need for funds, (ii) expected deposit flows, (iii) the yields available on
short-term liquid assets, (iv) the liquidity of our loan portfolio and (v) the
objectives of our asset/liability management program.****

At June 30, 2004, we had commitments to purchase or originate $17.5****million of
loans. Certificates of deposit scheduled to mature in one year or less at June
30, 2004, totaled $69.4 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 June 30, 2004 and 2003.

General.  Net income for the three months ended June 30, 2004 was $892,000
compared to $997,000 for the three months ended June 30, 2003, a decrease of
$105,000. Net interest income increased $251,000, while non-interest income
decreased $730,000 during the three months ended June 30, 2004 compared to the
same period in 2003. The Company sold its mortgage-banking subsidiary,
Community First Mortgage Corporation, during the June 30, 2003 quarter which
resulted in a gain of $241,000 during the quarter ended June 30, 2003. Return
on equity for the three months ended June 30, 2004 was 12.77% compared to
14.77% for the three month period ended June 30, 2003. Return on assets was
1.03% for quarter ended June 30, 2004 compared to 1.40% for the same period in
the previous fiscal year.

Interest Income. Total interest income increased by $142,000 to $4.6 million
for the three months ended June 30, 2004, from $4.4 million for the three
months ended June 30, 2003, due to higher average loan and security balances,
offset by lower yields for both investment securities and loans for the three
months ended June 30, 2004 as compared to the period ended June 30, 2003. The
decline in yields was due to the decline in market interest rates generally.
The average yield earned on interest-earning assets was 5.55% for the three
months ended June 30, 2004 compared to 6.04% for the three months ended June
30, 2003.

Interest Expense.  Total interest expense decreased by $109,000 to $1.4
million for the quarter ended June 30, 2004, from $1.5 million for the quarter
ended June 30, 2003. Interest on deposits decreased by $171,000 to $1.2
million for the quarter ended June 30, 2004 from $1.4 million for the quarter
ended June 30, 2003 due to a 40 basis point decline in the average rate paid
on deposits to 1.82% offset by higher average deposit balances.  Interest
expense on borrowed money increased by $62,000 to $152,000 for the quarter
ended June 30, 2004, from $ 90,000 for the quarter ended June 30, 2003, due to
an increase in average borrowings, offset by a decline in the rate paid on
borrowings.  The average rate paid on interest-bearing liabilities was 1.72%
during the three months ended June 30, 2004 compared to 2.14% for the three
months ended June 30, 2003.

Provision for Loan Losses.  The provision for loan losses increased by $17,000
to $164,000 for the three months ended June 30, 2004, from $147,000 for the
three months ended June 30, 2003.  We provide valuation allowances for
anticipated losses on loans and real estate when management determines that a
significant decline in the value of the collateral has occurred, as a result
of which the value of the collateral is less than the amount of the unpaid
principal of the related loan plus estimated costs of acquisition and sale. In
addition, we also provide allowances based on the dollar amount and type of
collateral securing our loans in order to protect against unanticipated
losses. Although management believes that it uses the best information
available to make such determinations, future adjustments to allowances may be
necessary, and net income could be significantly affected, if circumstances
differ substantially from the assumptions used in making the initial
determinations.

Noninterest Income.  Noninterest income decreased by $730,000 to $677,000 for
the three months ended June 30, 2004, from $1.4 million for the three months
ended June 30, 2003 due to a reduction in fee income which was generated by
the Bank's former mortgage loan subsidiary, Community First Mortgage
Corporation. Also included in non-interest income for the quarter ended June
30, 2003 was a gain of $241,000 attributable to the sale of Community First
Mortgage.

Noninterest Expense.  Noninterest expense decreased by $334,000 to $2.4
million for the three months ended June 30, 2004 compared to the same period
last year. The decline is attributable to compensation and benefits, which
decreased by $231,000 to $1.4 million compared to the same period last year,
paid to loan originators at our mortgage loan subsidiary which was sold during
the first quarter of 2004.

Taxes.  Taxes decreased by $56,000 to $419,000 for the three months ended June
30, 2004, from $475,000 for the three months ended June 30, 2003. The
effective tax rate decreased from 32.3% for the June 30, 2003 quarter to 31.9%
for the June 30, 2004 quarter.

RECENT ACCOUNTING PROCEDURES

No relevant accounting pronouncements were issued during the quarter ended June 30, 2004.

Disclosure Regarding Forward-Looking Statements

This document, including information incorporated by reference, contains, and
future filings by Community Financial Corporation on Form 10-K, Form 10-Q and
Form 8-K and future oral and written statements by Community Financial
Corporation and its management may contain, forward-looking statements about
Community Financial Corporation 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, including revenue creation,
lending origination, operating efficiencies, loan sales, charge-offs and loan
loss provisions, growth opportunities, interest rates, acquisition and
divestiture opportunities, and synergies, efficiencies, cost savings and
funding advantages. These forward-looking statements are based on currently
available competitive, financial and economic data and management's views and
assumptions regarding future events. These forward-looking statements are
inherently uncertain, and investors must recognize that actual results may
differ from those expressed or implied in the forward-looking statements.
Accordingly, Community Financial Corporation cautions readers not to place
undue reliance on any forward-looking statements.

Many of these forward-looking statements appear in this document in
Management's Discussion and Analysis. Words such as may, could, should, would,
believe, anticipate, estimate, expect, intend, plan and similar expressions
are intended to identify these forward-looking statements. The important
factors discussed below, as well as other factors discussed elsewhere in this
document and factors identified in our filings with the Securities and
Exchange Commission 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. Among the factors
that could cause our actual results to differ from these forward-looking
statements are:

- the strength of the United States economy in general and the strength of
the local economies in which we conduct our operations; general economic
conditions, either nationally or regionally, may be less favorable than
expected, resulting in, among other things, a deterioration in the
credit quality of our loans and other assets;
- the effects of, and changes in, trade, monetary and fiscal policies and
laws, including interest rate policies of the Federal Reserve Board;
- financial market, monetary and interest rate fluctuations, particularly
the relative relationship of short-term interest rates to long-term
interest rates;
- the timely development of and acceptance of new products and services of
Community Financial Corporation and Community 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 impact of changes in financial services laws and regulations
(including laws concerning taxes, accounting standards, banking,
securities and insurance); legislative or regulatory changes may
adversely affect the business in which we are engaged;
- the impact of technological changes;
- changes in consumer spending and saving habits; and
- our success at managing the risks involved in the foregoing.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk since March 31, 2004 year
end. Market risk is discussed as part of management's discussion and analysis
under asset/liability management in the Company's annual report for March 31,
2004.

Item 4.  Controls and Procedures

An evaluation of the Company's disclosure controls and procedures (as defined
in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) as of
June 30, 2004, was carried out under the supervision and with the
participation of the Company's Chief Executive Officer, Chief Financial
Officer and several other members of the Company's senior management. The
Company's Chief Executive Officer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures currently in effect are
effective in ensuring that the information required to be disclosed by the
Company in the reports it files or submits under the Act is: (i) accumulated
and communicated to the Company's management (including the Chief Executive
Officer and Chief Financial Officer) in a timely manner and (ii) recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. In addition, there have been no changes in our internal
control over financial reporting (as defined in Rule 13a-15(f) of the Act)
that occurred during the quarter ended June 30, 2004, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

The Company intends to continually review and evaluate the design and
effectiveness of its disclosure and control procedures and to improve its
controls and procedures over time and to correct any deficiencies that it may
discover in the future. The goal is to ensure that senior management has
timely access to all material financial and non-financial information
concerning the Company's business. While the Company believes the present
design of its disclosure controls and procedures is effective to achieve its
goal, future events affecting its business may cause the Company to modify its
disclosure controls and procedures.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Not Applicable.

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
        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: See Exhibit Index

b.  Reports on Form 8-K:  None

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: August 13, 2004 | By: | /s/ R. Jerry Giles                                              
|                      |     | R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer)

EXHIBIT INDEX

|Exhibit Number | Document                                                                                                                                                                                                                                                                                                                            
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            | Amended and Restated Articles of Incorporation, filed on July 5,
1996 as an exhibit to the Registrant's Definitive Proxy Statement
on Schedule 14A (SEC File No. 000-18265), are incorporated herein
by reference.                                                                                                                  
|3.2            | Bylaws, as amended and currently in effect, filed on June 30,
2004 as an exhibit to the Registrant's Annual Report on form 10-KSB (SEC File No. 000-18265) for the fiscal year ended March 31,
2004, are incorporated herein by reference.                                                                                          
|4              | Registrant's Specimen Common Stock Certificate, filed on June 29,
1999, as Exhibit 10 to the Annual Report on Form 10-KSB (SEC File
No. 000-18265) for the fiscal year ended March 31, 1999, is
incorporated herein by reference.                                                                                                   
|10.1           | Registrant's Stock Option and Incentive Plan, filed on May 19,
1989 as an exhibit to the Registrant's Registration Statement on
Form S-4 (SEC File No. 33-28817), is incorporated herein by
reference.                                                                                                                              
|10.2           | Employment Agreement by and between Community Bank and P. Douglas
Richard, filed on August 14, 2002 as an exhibit to the
Registrant's Quarterly Report on Form 10-QSB (SEC File No. 000-18265) for the quarter ended September 30, 2000, is incorporated
herein by reference.                                                       
|10.3           | Amendments No. One and Two to the Employment Agreement between
the Bank and P. Douglas Richard, filed on August 14, 2002 as
exhibits to the Registrant's Quarterly Report on Form 10-QSB (SEC
File No. 000-18265) for the quarter ended June 30, 2002, are
incorporated herein by reference.                                        
|10.4           | Registrant's 1996 Incentive Plan, filed on July 5, 1996 as an
exhibit to the Registrant's Definitive Proxy Statement on
Schedule 14A (SEC File No. 000-18265), is incorporated herein by
reference.                                                                                                                                 
|10.5           | Employment Agreement by and between Community Bank and Chris P.
Kyriakides, as amended, filed on August 14, 2002 as an exhibit to
the Registrant's Quarterly Report on Form 10-QSB (SEC File No.
000-18265) for the quarter ended June 30, 2002, is incorporated
herein by reference.                                               
|10.6           | Severance Agreements by and between Community Bank and each of R.
Jerry Giles, Norman C. Smiley, Benny N. Werner, filed on June 30,
2003 as exhibits to the Registrant's Annual Report on Form 10-KSB
(SEC File No. 000-18265) for the fiscal year ended March 31,
2003, are incorporated herein by reference.                      
|10.7           | Amendments to the Severance Agreements by and between the Bank
and each of R. Jerry Giles, Norman C. Smiley, III and Benny N.
Werner, filed on June 30, 2004 as an exhibit to the Registrant's
Annual Report on form 10-KSB (SEC File No. 000-18265) for the
fiscal year ended March 31, 2004, are incorporated herein by
reference.

|10.8 | Retirement Agreements by and between Community Bank and Non-Employee Directors Hickok, Smith, Andersen, Cooke, Fairchilds and
Trimyer, filed on June 30, 2004 as an exhibit to the Registrant's
Annual Report on form 10-KSB (SEC File No. 000-18265) for the
fiscal year ended March 31, 2004, are incorporated herein by
reference.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.9 | Supplemental Executive Retirement Agreements by and between
Community Bank and Officers Richard, Kyriakides, Giles, Smiley
and Werner, filed on June 30, 2004 as an exhibit to the
Registrant's Annual Report on form 10-KSB (SEC File No. 000-18265) for the fiscal year ended March 31, 2004, are incorporated
herein by reference.
|11   | Statement re computation of per share earnings (see footnote 3 to
the financial statements filed with this report).                                                                                                                                                                                                                  
|31.1 | Rule 13(a)-14(a) Certification (Chief Executive Officer)                                                                                                                                                                                                                                                                             
|31.2 | Rule 13(a)-14(a) Certification (Chief Financial Officer)                                                                                                                                                                                                                                                                             
|32   | Section 1350 Certifications                                                                                                                                                                                                                                                                                                          
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