<PAGE>
<PAGE>
                                   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 DECEMBER 31, 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)

               VIRGINIA                             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 January 31, 1998:  1,279,723.

Transitional Small Business Disclosure Format (Check one)

              Yes                    No    X     
PAGE
<PAGE>

                          COMMUNITY FINANCIAL CORPORATION
                                         

                                       INDEX

                                                                  

PART I.  FINANCIAL INFORMATION                                        PAGE

Item 1.  Financial Statements


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

         Consolidated Statements of Income for the Three and
         Nine Months Ended December 31, 1997 and 1996 (unaudited).......2

         Consolidated Statements of Cash Flows for the
         Nine Months Ended December 31, 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 ............................................10

         Signature Page................................................11

         Exhibit Index.................................................12



















<PAGE>
      
                          COMMUNITY FINANCIAL CORPORATION
                   CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>                          
                                     December 31,      March 31, 
                                         1997            1997    
                                     ------------    -------------
                                      (Unaudited)                
<S>                                  <C>              <C>
ASSETS
Cash (including interest bearing                       
  deposits of approximately 
  $2,592,000 and $1,015,000)         $  7,385,691     $  4,922,213 
Securities             
  Held to maturity                      4,357,866        5,197,437
  Available for sale                    3,452,295        2,243,220
Investment in Federal Home Loan 
  Bank stock, at cost                   1,600,000        1,400,000
Loans receivable, net                 160,792,465      148,905,485
Real estate owned                         294,226          173,245
Property and equipment, net             3,541,503        3,542,108
  Accrued interest receivable                                          
  Loans                                   935,711          851,365
  Investments                             146,343          138,073
Prepaid expenses and other assets         373,365          
334,036                                                                         
              
                                     $182,879,465     $167,707,182       

LIABILITIES AND STOCKHOLDERS' EQUITY 
Liabilities
Deposits                             $132,962,517     $116,594,885
Advances from Federal Home Loan                                        
  Bank                                 23,000,000       26,000,000
Advance payments by borrowers for
  taxes and insurance                     126,664          135,561       
Other liabilities                       1,866,582        1,639,740

        Total Liabilities             157,955,763      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,
    1,277,223 and 1,275,348 shares
    outstanding                            12,772           12,753 
  Additional paid in capital            4,726,159        4,716,677 
  Retained earnings                    18,094,323       17,266,745
  Net unrealized gain on securities
    available for sale                  2,090,448        1,340,821
     Total Stockholders' Equity        24,923,702       23,336,996

                                     $182,879,465     $167,707,182
</TABLE>
  See accompanying notes to consolidated financial statements.

<PAGE>                                           
                            
                         COMMUNITY FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                            Three Months Ended    Nine Months Ended
                               December 31,          December 31,
                            ------------------     -----------------
                              1997       1996       1997       1996 
                            --------    ------     ------     ------ 
                               (Unaudited)             (Unaudited)

<S>                        <C>        <C>        <C>        <C>        
                                                       
INTEREST INCOME
  Loans                    $3,387,279 $3,091,911 $ 9,940,155$ 9,082,320  
  Investment securities       118,382    113,482     378,684    363,173
  Other                        32,472     27,087      92,946     81,605
    Total interest income   3,538,133  3,232,480  10,411,785  9,527,098

INTEREST EXPENSE
  Deposits                  1,520,598   1,278,307  4,299,177  3,773,232       
  Borrowed money              363,245    375,014   1,188,240  1,113,329  
    Total interest expense  1,883,843  1,653,321   5,487,417  4,886,561  

NET INTEREST INCOME         1,654,290  1,579,159   4,924,368  4,640,537  

PROVISION FOR LOAN LOSSES      25,001     53,296     417,631    155,933     

NET INTEREST INCOME AFTER
 PROVISION FOR LOAN LOSSES  1,629,289  1,525,863   4,506,737  4,484,604 

NONINTEREST INCOME
  Service charges, fees
    and commissions           206,597    131,351     538,805    370,462    
  Miscellaneous                   636      4,835      11,422     18,752     
    Total noninterest
      income                  207,233    136,186     550,227    
389,214                                                                   
NONINTEREST EXPENSE
  Compensation & benefits     488,816    311,808   1,355,513    896,424    
  Occupancy                   125,311     89,787     351,663    288,030    
  Data processing              99,581     79,691     307,233    254,466   
  Federal insurance premium    18,235     48,161      54,521    842,261    
  Miscellaneous               252,132    204,145     819,912    636,412    
    Total noninterest
      expense                 984,075    733,592   2,888,842  2,917,593  

INCOME BEFORE TAXES           852,447    928,457   2,168,122  1,956,225  

INCOME TAXES                  313,349    349,117     804,647    732,599    

NET INCOME                 $  539,098 $  579,340 $ 1,363,475 $1,223,626 
                             
BASIC EARNINGS PER SHARE   $     0.42 $     0.46 $      1.07 $     0.96
DILUTED EARNINGS PER SHARE $     0.42 $     0.45 $      1.06 $     0.96
DIVIDENDS PER SHARE        $     0.14 $     0.13 $       .42 $     0.39 

</TABLE>
       See accompanying notes to consolidated financial 
statements.                    

PAGE
<PAGE>
                  COMMUNITY FINANCIAL CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> 
                                                  Nine Months Ended  
                                                     December 31,     
                                              ---------------------------
                                                  1997           1996     
                                              -----------     -----------
                                                     
(Unaudited)                <S>                                            
<C>              <C>     
OPERATING ACTIVITIES                                 
  Net income                                  $1,363,475        $1,223,626
  Adjustments to reconcile net income to  
   net cash provided by operating activities
     Provision for loan losses                   417,630         155,933
     Depreciation                                171,278         163,725
     Amortization of premium and accretion  
       of discount on securities, net             (1,054)         
(4,320)           (Decrease) in net deferred loan fees         (85,313)        
(14,335)     
     Increase in deferred income taxes            11,389          47,434
     Decrease (increase) in other assets        (252,926)        124,745 
     Increase (decrease) in other liabilities   (252,892)        (32,074) 
     (Gain)loss on sale of loans                   6,079         (11,227)
     Proceeds from sale of loans               2,078,400         876,600
     Loans originated for resale              (2,359,400)     (1,048,350) 
   Net cash provided by operating activities   1,096,666       1,481,757 

INVESTING ACTIVITIES
  Proceeds from maturities of held for
    investment securities                      2,550,000       2,000,000
  Purchases of investment securities          (2,149,375)     (1,000,234)
  Net decrease (increase) in loans           (11,517,190)     (6,645,492)
  Purchases of property and equipment           (157,858)        (24,893)
  Redemption (purchase) of FHLB stock           (200,000)           -0- 
    Net cash provided (absorbed) by 
      investing activities                   (11,474,423)     (5,670,619)
     
FINANCING ACTIVITIES
  Dividends paid                                (535,898)       (496,027)
  Net increase (decrease) in deposits         16,367,632       4,599,790
  Proceeds from advances and other 
   borrowed money                             76,000,000      33,000,000
  Repayments of advances and other
   borrowed money                            (79,000,000)    (32,000,000)
  Proceeds from issuance of common stock           9,501          10,600      
Net cash provided (absorbed) by  
  financing activities                        12,841,235       5,114,363  

INCREASE (DECREASE) IN CASH AND CASH                    
  EQUIVALENTS                                  2,463,478         925,501 

CASH AND CASH EQUIVALENT-beginning of period   4,922,213       3,673,085
CASH AND CASH EQUIVALENTS-end of period       $7,385,691      $4,598,586   
</TABLE>

   See accompanying notes to consolidated financial statements. 
PAGE
<PAGE>

                          COMMUNITY FINANCIAL CORPORATION
           NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 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-QSB 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(the "Company"), its wholly-owned subsidiary, 
Community Bank(the "Bank") and Community First Mortgage Corporation, a 
wholly-owned subsidiary of the Bank ("First Mortgage"). First Mortgage was 
incorporated on November 12, 1997.  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, 1997, are 
not necessarily indicative of the results that may be expected for the year
ending March 31, 1998.

NOTE 2. - EARNINGS PER SHARE
  
Basic and diluted earnings per share for the periods presented in 1997 and 
1996 are computed under a new accounting standard effective in the quarter 
ended December 31, 1997.  All prior amounts have been restated to be 
comparable.  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.  Basic earnings per share for the 
three months ended December 31, 1997 and 1996 have been determined by dividing 
net income by the weighted average number of shares of common stock 
outstanding during these periods (1,276,741 and 1,272,348, respectively).The 
number of shares used to determine diluted earnings per share for the same 
three month periods is 1,288,923 and 1,279,424, respectively. Earnings per 
share for the nine months ended December 31, 1997 and 1996 have been 
determined by dividing net income by the weighted average number of shares of 
common stock outstanding during these periods (1,275,825 and 1,271,690, 
respectively). The number of shares used to determine diluted earnings per 
share for the same nine month periods as above was 1,284,946 and 1,277,715, 
respectively.

NOTE 3. - REGULATORY CAPITAL AND DIVIDENDS DISCUSSION

The following table presents the Bank's capital levels at December 31, 1997, 
relative to the Office of Thrift Supervision (the "OTS")requirements 
applicable at that date: 

<TABLE>               
<CAPTION>
                      Amount     Percent    Actual      Actual      
Excess                           Required   Required    Amount      
Percent     Amount                         ----------   ---------  
---------    -------   -----------
<S>                <C>          <C>       <C>           <C>       
<C>          
        
Tangible Capital  $ 2,722,000   1.50%     $21,184,000   11.68%    $18,462,000
Core Capital        5,443,000   3.00       21,184,000   11.68      15,741,000
Risk-based Capital 10,173,000   8.00       22,194,000   17.45      12,021,000
</TABLE>

<PAGE>

NOTE 3. - REGULATORY CAPITAL AND DIVIDEND DISCUSSION (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" association 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
requires prior notice to the OTS with the opportunity for the OTS to object to 
the distribution. A Tier 1 association is defined as an association that has 
capital immediately prior to and on a pro forma basis after the proposed 
distribution, 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 
associations 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 December 31, 1997 and 1996 was
$1,902,043 and $1,630,547, respectively. Total interest paid for the nine 
months ended December 31, 1997 and 1996 was $5,559,029 and $4,899,937. Total 
income taxes paid for the three months ended December 31, 1997 and 1996 was 
$375,382 and $156,077. Total income taxes paid for the nine months ended 
December 31, 1997 and 1996 was $1,045,174 and $704,737.  
                              
                                  
Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

FINANCIAL CONDITION

The Company's total assets increased $15.2 million to $182.9 million at 
December 31, 1997, due primarily to a increase in loans of $11.9 million. The 
increase in loans receivable was due primarily to the origination of variable 
rate mortgage loans and consumer loans. Deposits increased $16.4 million to 
$133.0 million at December 31, 1997, from $116.6 million at March 31, l997 
while Federal Home Loan Bank advances decreased during the same period from 
$26.0 million to $23.0 million. The increase in deposits was used primarily to 
fund the increase in loans and repay borrowings. Stockholders' equity 
increased to $24.9 million at December 31, 1997, from $23.3 million at March 
31, 1997, due primarily to earnings for the nine month period ended December 
31, 1997 and an adjustment in the market value of Federal Home Loan Mortgage 
Corporation stock, which was partially offset by the payment of cash 
dividends.

At December 31, 1997, the Bank's non-performing assets totaled $810,000 or 
0.44% of total assets compared to $676,000 or .40% of total assets at March 
31, 1997. At   December 31, 1997 the Company's non-performing assets were 
comprised of four  residential rental properties which were more than 90 days 
past due and various consumer loans. Also included in non-performing assets is 
approximately $270,000 of one-to-four residential rental properties  


<PAGE>
which were acquired by foreclosure and various repossessed vehicles. Based on 
current market values of the collateral securing these loans, management 
anticipates no significant losses in excess of the reserves for losses 
previously recorded. At December 31, 1997 the Company's allowance for loan 
losses totaled $1,050,961 or .65% of net loans receivable and 130% of 
non-performing loans, compared to $1,039,013 or .70% of net loans receivable 
and 154% of non-performing loans at March 31, 1997. See "Results of Operations 
-Three Months Ended December 31, 1997 and 1996 - Provision for Loan Losses."

     Management establishes an allowance for loan losses based on an analysis 
of risk factors in the loan portfolio. This analysis includes the evaluation 
of concentrations of credit, past loss experience, current economic 
conditions, amount and composition of the loan portfolio, estimated fair value 
of underlying collateral, loan commitments outstanding, delinquencies, and 
other factors. Since the Company has had extremely low loan losses during its 
history, management also considers loss experience of similar portfolios in 
comparable lending markets. Accordingly, the calculation of the adequacy of 
the allowance for loan losses was not based directly on the level of 
non-performing assets.

     Management will continue to monitor the allowance for loan losses through 
the provision for loan losses as economic conditions dictate. Although the 
Company maintains its allowance for loan losses at a level which it considers 
to be adequate to provide for losses, there can be no assurance that future 
losses will not exceed estimated amounts or that additional provisions for 
loan losses will not be required in future periods. In addition, management's 
determination as to the amount of the allowance for loan losses is subject to 
review by the OTS and the Federal Deposit Insurance Corporation as part of 
their examination process, which may result in the establishment of an 
additional allowance based upon their judgement of the information available 
to them at the time of their examination. 

LIQUIDITY AND CAPITAL RESOURCES

     The Company's principal sources of funds are deposits, principal and 
interest repayments on loans, interest-bearing deposits and securities 
available for sale.  While scheduled loan repayments and maturing investments 
are relatively predictable , deposit flows and early loan prepayments are more 
influenced by interest rates, general economic conditions and competition.

     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 December 31, 
1997, the Bank's liquidity ratio (liquid assets as a percentage of net 
withdrawable savings and current borrowings) was 7.09%, which exceeds the 
regulatory requirement of 4.00%.   

     The Company uses its liquidity resources principally to meet ongoing 
commitments, to fund maturing certificates of deposit and deposit withdrawals, 
and to meet operation expenses.  The Company anticipates that it will have 
sufficient funds available to meet current loan commitments.  At December 31, 
1997, the Company had outstanding commitments to extend credit which amounted 
to $13.7 million (including $1.8 million in available home equity lines of 
credit).  At December 31, 1997, the Company had $23.0 million in advances from 
the Federal Home Loan Bank of Atlanta.  Management believes 
that loan  repayments and other sources of funds, 
including Federal Home Loan Bank PAGE
<PAGE>
 
borrowings, will be adequate to meet the Company's foreseeable liquidity 
needs.

     The Bank is subject to certain capital to asset requirements in 
accordance with Bank regulations. See Note 3 of the Notes to Consolidated 
Financial Statements contained in this report.


RESULTS OF OPERATIONS

Three Months Ended December 31, 1997 and 1996.
----------------------------------------------

General.  Net income for the three months ended December 31, 1997 was $539,000 
compared to $579,000 for the three months ended December 31, 1996. The 
decrease was due primarily to an increase in noninterest expense which was 
offset in part by an increase in net interest income and noninterest income 
all as further described below.   Income before taxes decreased to $852,000 
for the three months ended December 31, 1997 from $928,000 for the three 
months ended December 31, 
1997.                                                                           
                
Interest Income.   Total interest income increased to $3.5 million for the
three months ended December 31, 1997, from $3.2 million for the three months 
ended December 31, 1996, due to an increase in the balances of loans for the 
three months ended December 31, 1997 as compared to the period ended December 
31, 1996.

Interest Expense.  Total interest expense increased to $1.9 million for the
three months ended December 31, 1997, from $1.7 million for the three months 
ended December 31, 1996. Interest on deposits increased to $1.5 million for 
the three months ended December 31, 1997 from $1.3 million for the three 
months ended December 31, 1996 due primarily to an increase in the average 
outstanding balance of deposits, primarily certificates of deposit. Interest 
expense on borrowed money decreased to $363,000 for the quarter ended December 
31, 1997, from $375,000 for the quarter ended December 31, 1996, due to a 
decrease in the average rate on borrowings from 5.78% for the three months 
ended December 31, 1996 to 5.69% for same period ended December 31, 1997.  The 
average rate paid on interest-bearing liabilities was 4.83% for the three 
months ended December 31, 1997 compared to 4.78% for the three months ended 
December 31, 
1996.                                                                           
             
Provision for Loan Losses.  The provision for loan losses decreased 
to $25,000 for the three months ended December 31, 1997, from $53,000 for    
the three months ended December 31, 1996. The decrease in provision for loan 
losses is attributable primarily to a decrease in delinquent loans.  See -- 
"Financial 
Condition."                                                                     
                                             
Noninterest Income.  Noninterest income increased to $207,000 for the three
months ended December 31, 1997, from $136,000 for the three months ended
December 31, 1996 due primarily to an increase in checking account charges 
which is related to an increase in account volume.  The number of checking 
accounts increased due to marketing through direct mail.  As the volume of 
checking accounts increased, so did the volume of overdraft charges which 
increased noninterest income.

<PAGE>

Noninterest Expenses.  Noninterest expense increased to $984,000 for the three
months ended December 31, 1997, from $734,000 for the three months ended
December 31, 1996. The increase in noninterest expense is primarily 
attributable to an increase in compensation and other expenses related to the 
opening of a branch location on April 9, 1997 in Virginia Beach, Virginia and 
the formation of First Mortgage which operates in Richmond, Virginia.  The 
formation expenses were office space and furniture rental and salary expense 
for two employees.  First Mortgage was formed to originate mortgage loans.
  
Taxes.  Taxes decreased to $313,000 for the three months ended December 31,
1997, from $349,000 for the three months ended December 31, 1996, due to the
decrease in income before taxes.   

Nine Months Ended December 31, 1997 and 1996
--------------------------------------------

General.  Net income for the nine months ended December 31, 1997 was $1.4 
million compared to $1.2 million for the nine months ended December 31, l996. 
The primary reason for the increase in net income was the absence of the 
one-time assessment paid by the Bank in 1996 of $416,000, net of tax, to  
recapitalize the SAIF.  Excluding the SAIF assessment, net income decreased 
$276,000 for the nine months ended December 31, 1997 compared to the same 
period in 1996.

Interest Income.  Total interest income increased to $10.4 million for the 
nine months ended December 31, 1997, from $9.5 million for the nine months 
ended December 31, 1996, due primarily to an increase in the balance of loans.
    
Interest Expense.  Total interest expense increased to $5.5 million for the 
nine months ended December 31, 1997, from $4.9 million for the nine months 
ended December 31, 1996.  Interest on deposits, primarily certificates of 
deposit, increased to $4.3 million for the nine months ended December 31, 
1997, from $3.8 million for the same period last year due primarily to an 
increase in the average outstanding deposit balances. The deposit balances 
increased because of a special promotion at rates offered on certificates of 
deposit.  Interest expense on borrowed money increased to $1.2 million for the 
nine months ended December 31, 1997 from $1.1 million for the nine months 
ended December 31, 1996, due  to both an increase in the cost of borrowings 
and increased borrowings from the Federal Home Loan Bank of Atlanta. The cost 
of borrowings increased from 5.68% for the nine months ended December 31, 1996 
to 5.78% for the period ended December 31, 1997.
              
Provision for Loan Losses.  The provision for loan losses increased  to 
$417,630 for the nine months ended December 31, 1997, from $155,933 for the 
same period last year due to an increase in the size of the loan portfolio and 
the origination of a greater number of consumer loans, which generally carry a 
higher risk of default than residential mortgage loans and one secured by 
rapidly depreciating collateral.  Chargeoffs on one-to-four family loans also 
increased during the year. 

Noninterest Income.  Noninterest income increased to $550,227 for the nine
months ended December 31, 1997, from $389,214 for the nine months ended
December 31, 1996, due to an increase in the fees and service charges on 
checking accounts as the volume of accounts increased and gains resulting from 
the sale of fixed rate mortgage loans.

Noninterest Expenses.  Noninterest expenses decreased to $2.8 million for the
nine months ended December 31, 1997, from $2.9 million for the same period 
last year. The decrease is related primarily to the one-time SAIF premium 
discussed above, offset, in part, by an increase in compensation and other 
expenses related to the opening of a branch location on April 9, 1997 in 
Virginia Beach, Virginia and the formation of First Mortgage which operates in 
Richmond, Virginia.

<PAGE>

Taxes.  Taxes increased to $804,647 for the nine months ended December 31,
1997, from $732,599 for the nine months ended December 31, 1996, due to an 
increase in income before taxes for the nine months ended December 31, 1997. 

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 the Company.  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

         (a) See Exhibit Index

         (b) No Reports on Form 8-k were filed during the quarter ended
             December 31, 1997.          
<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:  February 11, 1998                                 
                                   By: (s) R. Jerry Giles                     
                                       -------------------------------
                                        R. Jerry Giles
                                        Chief Financial Officer
                                        (Duly Authorized Officer)










































                                       
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COMMUNITY FINANCIAL CORPORATION

                               EXHIBIT INDEX

Exhibit No.            Description        


11                     Computation of Per Share Earnings.
27                     Financial Data Schedule (Edgar Only).

         
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