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

FORM 10-Q

|                                                        | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------------- | ----------------------------------------------------------------------------------------
|FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2006       
|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

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

---

---

Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated or a non-accelerated filer.  See definition of "accelerated filer" and "large accelerated filer" (as defined in Rule 12b-2 of the Exchange Act). (Check one)

Large accelerated filer             Accelerated filer             Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No

Number of shares of Common Stock, par value $.01 per share, outstanding at the close of business on February 8, 2007:   4,286,732.



COMMUNITY FINANCIAL CORPORATION

INDEX

|PART I.        | FINANCIAL INFORMATION                                                                                        |   
|-------------- | ------------------------------------------------------------------------------------------------------------ | --
|               |                                                                                                              |   
|Item 1.        | Consolidated Financial Statements                                                                            |   
|               |                                                                                                              |   
|               | Consolidated Statements of Financial
Condition at December 31, 2006 (unaudited)
and March 31, 2006           | 3 
|               |                                                                                                              |   
|               | Consolidated Statements of Income for the
Three and Nine Months Ended December 31, 2006 and 2005
(unaudited) | 4 
|               |                                                                                                              |   
|               | Consolidated Statements of Cash Flows for the
Nine Months Ended December 31, 2006 and 2005(Unaudited)        | 5 
|               |                                                                                                              |   
|               | Notes to Unaudited Interim Consolidated
Financial Statements                                                 | 6 
|               |                                                                                                              |   
|Item 2.        | Management's Discussion and Analysis of Financial Condition
and Results of Operations                        | 11
|               |                                                                                                              |   
|Item 3.        | Quantitative and Qualitative Disclosures About Market Risk                                                   | 19
|               |                                                                                                              |   
|Item 4.        | Controls and Procedures                                                                                      | 19
|               |                                                                                                              |   
|PART II.       | OTHER INFORMATION                                                                                            | 21
|               |                                                                                                              |   
|Signature Page |                                                                                                              | 22
|               |                                                                                                              |   
|Exhibit Index  |                                                                                                              | 23



Part I. Financial Information

Item 1. Financial Statements

|COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                   
|-----------------------------------------------------------------------------------------------------------------
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|                                                                                                                 
|ASSETS                                                                                                           
|Cash (including interest-bearing deposits of
     approximately $2,760,000 and $1,742,000)                       
|Securities                                                                                                       
|Held to maturity                                                                                                 
|Available for sale, at fair value                                                                                
|Restricted investment in Federal
     Home Loan Bank stock, at cost                                              
|Loans receivable, net of allowance for loan losses
     of $2,977,352 and $2,966,077                             
|Real estate owned                                                                                                
|Property and equipment, net                                                                                      
|Accrued interest receivable                                                                                      
|Loans                                                                                                            
|Investments                                                                                                      
|Prepaid expenses and other assets                                                                                
|Total Assets                                                                                                     
|                                                                                                                 
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                             
|                                                                                                                 
|Liabilities                                                                                                      
|Deposits                                                                                                         
|Advances from Federal Home Loan Bank                                                                             
|Securities sold under agreement to repurchase                                                                    
|Advance payments by borrowers for
          taxes and insurance                                                  
|Other liabilities                                                                                                
|                                                                                                                 
|Total Liabilities                                                                                                
|                                                                                                                 
|Stockholders' Equity                                                                                             
|Preferred stock $.01 par value,
     authorized 3,000,000 shares,
     none outstanding                          
|                                                                                                                 
|Common stock, $0.01 par value,
     authorized 20,000,000 shares,
     4,286,732 and 2,121,056 shares outstanding
|                                                                                                                 
|Additional paid in capital                                                                                       
|Retained earnings                                                                                                
|Accumulated other comprehensive income                                                                           
|Total Stockholders' Equity                                                                                       
|                                                                                                                 
|Total Liabilities and Stockholders' Equity                                                                       

See accompanying notes to unaudited interim consolidated financial statements.



|COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
|-----------------------------------------------------------------
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|INTEREST INCOME                                                  
|Loans                                                            
|Investment securities                                            
|Other                                                            
|Total Interest Income                                            
|                                                                 
|INTEREST EXPENSE                                                 
|Deposits                                                         
|Borrowed money                                                   
|Total interest expense                                           
|                                                                 
|NET INTEREST INCOME                                              
|                                                                 
|PROVISION FOR LOAN LOSSES                                        
|                                                                 
|NET INTEREST INCOME AFTER PROVISION
     FOR LOAN LOSSES         
|                                                                 
|NONINTEREST INCOME                                               
|Service charges, fees and commissions                            
|Other                                                            
|Total noninterest income                                         
|                                                                 
|NONINTEREST EXPENSE                                              
|Compensation & benefits                                          
|Occupancy                                                        
|Data processing                                                  
|Federal insurance premium                                        
|Advertising                                                      
|Other                                                            
|Total noninterest expense                                        
|                                                                 
|INCOME BEFORE TAXES                                              
|                                                                 
|INCOME TAXES                                                     
|                                                                 
|NET INCOME                                                       
|                                                                 
|BASIC EARNINGS PER SHARE                                         
|DILUTED EARNINGS PER SHARE                                       
|DIVIDENDS PER SHARE                                              

See accompanying notes to unaudited interim consolidated financial statements.



|                                                                                    | Nine Months EndedDecember 31
|----------------------------------------------------------------------------------- | ----------------------------
|                                                                                    | 2006                        
|OPERATING ACTIVITIES                                                                |                             
|Net income                                                                          | $ 3,147,657                 
|Adjustments to reconcile net income to    net cash provided by operating activities |                             
|Provision for loan losses                                                           | 222,892                     
|Depreciation                                                                        | 440,538                     
|Amortization of premium and accretion       of discount on securities, net          | 7,386                       
|(Decrease) in net deferred loan fees                                                | (83,825                     
|(Decrease)in deferred income taxes                                                  | (112,945                    
|(Increase)decrease in other assets                                                  | (268,736                    
|Increase in other liabilities                                                       | 1,398,585                   
|                                                                                    |                             
|Net cash provided by operating activities                                           | 4,751,852                   
|                                                                                    |                             
|INVESTING ACTIVITIES                                                                |                             
|Proceeds from maturities of held to maturity                                        |                             
|Securities                                                                          | 1,170,000                   
|Net increase in loans                                                               | (26,376,917                 
|Purchases of property and equipment                                                 | (358,866                    
|(Purchase)of FHLB stock                                                             | (315,000                    
|(Increase)in Real Estate Owned                                                      | (20,937                     
|Net cash absorbed by investing activities                                           | (25,901,720                 
|FINANCING ACTIVITIES                                                                |                             
|Dividends paid                                                                      | (807,051                    
|Net increase in deposits                                                            | 15,608,778                  
|Proceeds from advances and other borrowed money                                     | 1,196,048,822               
|Repayments of advances and other borrowed money                                     | (1,188,080,031              
|Proceeds from issuance of common stock                                              | 254,252                     
|Net cash provided by financing activities                                           | 23,024,770                  
|INCREASE IN CASH AND CASH EQUIVALENTS                                               | 1,874,902                   
|CASH AND CASH EQUIVALENTS - beginning of period                                     | 3,507,261                   
|CASH AND CASH EQUIVALENTS - end of period                                           | $ 5,382,163                 

See accompanying notes to unaudited interim consolidated financial statements



COMMUNITY FINANCIAL CORPORATION
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

**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") 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 and nine
months ended December 31, 2006, are not necessarily indicative of the results that may be expected for the year ending March 31, 2007.


**Note 2. Stock Split**

On July 26, 2006, the Company declared a 2 for 1 stock split in the form of a 100% stock dividend payable on August 23, 2006. Basic and diluted earnings per share have been retroactively adjusted
for this split for all periods presented.


**Note 3. - Stock-Based Compensation Plan**

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R, "Share-Based Payment" (SFAS 123R). SFAS 123R requires
companies to recognize the cost of employee services received in exchange for awards of equity instruments, such as stock options and restricted stock, based on the fair value of those awards at the
date of grant and eliminates the choice to account for employee stock options under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25). The Company
adopted SFAS 123R effective April 1, 2006 using the modified prospective method and as such, results for prior periods have not been restated. Prior to April 1, 2006, no compensation expense was
recognized for stock option grants as all such grants had an exercise price not less than fair market value on the date of grant. There were no stock options granted during the three and nine month periods ended December 31, 2006 quarter and no stock-based compensation recognized. No proforma compensation expense is
disclosed for the three and nine month period ended December 31, 2006 as no options were granted or vested.




The following summarizes the stock option activity for the three months ended December 31, 2006:


|                                        |          |             |              |          |           
|--------------------------------------- | -------- | ----------- | ------------ | -------- | ----------
|                                        |          |             |              | Weighted | Intrinsic 
|                                        | Weighted | Average     | Value of    
|                                        | Average  | Remaining   | Unexercised 
|                                        | Exercise | Contractual | In-the-Money
|                                        | Shares   |             | Price        | Term     | Options   
|                                        |          |             |              |          |           
|Options outstanding, September 30, 2006 | 534,500  |             | $8.02        |          |           
|Granted                                 | ---      |             | ---          |          |           
|Exercised                               | (39,000  | )           | $5.51        |          |           
|Forfeited                               | (8,000   | )           | 9.40         |          |           
|Options outstanding, December 31, 2006  | 487,500  |             | $8.19        | 5.4      |           
|Options exercisable, December 31, 2006  | 487,500  |             | $8.19        | 5.4      | $1,873,847
|                                        |          |             |              |          |           

Information in the above table has been restated to reflect the 2 for 1 split in the form of a 100% stock dividend described in Note 2. The total intrinsic value of in-the-money options exercised during the three month ended December 31, 2006 was $269,565.


**NOTE 4. - EARNINGS PER SHARE**

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




|                                             | For the Three Months Ended
|-------------------------------------------- | --------------------------
|                                             | December 31, 2006         
|                                             |                           
|                                             | Income                    
|                                             |                           
|Basic EPS                                    |                           
|                                             |                           
|Income available to common
     stockholders | $1,041,683                
|                                             |                           
|Effect of Dilutive Securities                |                           
|                                             |                           
|Options                                      | ---                       
|                                             |                           
|Diluted EPS                                  |                           
|                                             |                           
|Income available to common
     stockholders | $1,041,683                
|                                             |                           

During the quarter ended December 31, 2006, no stock options were excluded from the calculation of earnings per share because they would have been anti-dilutive. During the quarter
ended December 31, 2005, stock options representing 47,000 shares were not included in the calculation of earnings per share because they would have been anti-dilutive.


|                                             | For the Nine Months Ended
|-------------------------------------------- | -------------------------
|                                             | December 31, 2006        
|                                             |                          
|                                             | Income                   
|                                             |                          
|Basic EPS                                    |                          
|                                             |                          
|Income available to common
     stockholders | $3,147,657               
|                                             |                          
|Effect of Dilutive Securities                |                          
|                                             |                          
|Options                                      | ---                      
|                                             |                          
|Diluted EPS                                  |                          
|                                             |                          
|Income available to common
     stockholders | $3,147,657               
|                                             |                          

Information in the above table has been restated to reflect the 2 for 1 stock split in the form of a 100% stock dividend described in Note 2.


**NOTE 5. - STOCKHOLDERS' EQUITY**

The following table presents the Bank's regulatory capital levels at December 31, 2006:




|                   | Amount
Required | Percent
Required |   | Actual
Amount | Actual
Percent |   | Excess
Amount
|------------------ | --------------- | ---------------- | - | ------------- | -------------- | - | -------------
|                   |                 |                  |   |               |                |   |              
|                   |                 |                  |   |               |                |   |              
|Tangible Capital   | $ 6,771,000     | 1.50             | % | $34,978,000   | 7.75           | % | $28,207,000  
|Core Capital       | 18,158,000      | 4.00             |   | 34,978,000    | 7.75           |   | 16,820,000   
|Risk-based Capital | 29,444,000      | 8.00             |   | 39,026,000    | 10.60          |   | 9,582,000    

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


**NOTE 6. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS**

Total interest paid for the nine months ended December 31, 2006 and 2005 was $9,954,910 and $6,871,326, respectively. Total income taxes paid for the nine months ended December 31,
2006 and 2005 was $1,988,362 and 1,618,184.


**NOTE 7. - COMPREHENSIVE INCOME**

Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner
sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners." Comprehensive income for the Company includes net income and
unrealized gains and losses on securities available for sale. The following tables set forth the components of comprehensive income for the three-month periods ended December 31, 2006 and
2005:


|                                                      | Nine months Ended December 31
|----------------------------------------------------- | -----------------------------
|                                                      | 2006                         
|                                                      |                              
|Net Income                                            | $3,147,657                   
|                                                      |                              
|Other comprehensive income, net of tax                |                              
|Unrealized gains(losses)on securities:                |                              
|Unrealized holding gains arising    during the period | 476,830                      
|                                                      |                              
|Total comprehensive income                            | $3,624,487                   
|                                                      |                              



**Note 8. - 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 EndedDecember 31
|------------------------------ | -----------------------------
|                               | 2006                         
|Service cost                   | $72,011                      
|Interest cost                  | 36,048                       
|Expected return on plan assets | (35,876                      
|Recognized net actuarial loss  | 6,849                        
|                               | $79,032                      

|                               | Nine Months EndedDecember 31
|------------------------------ | ----------------------------
|                               | 2006                        
|Service cost                   | $216,034                    
|Interest cost                  | 108,143                     
|Expected return on plan assets | (107,628                    
|Recognized net actuarial loss  | 20,547                      
|                               | $237,096                    

The Company made a contribution of $390,358 to its pension plan for the current fiscal year on November 27, 2006.




|**ITEM 2.** | **MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**
|----------- | ------------------------------------------------------------------------------------------

**EXECUTIVE SUMMARY**

The following information is intended to provide investors a better understanding of the financial position and the operating results of Community Financial Corporation and its subsidiary,
Community Bank. The following is primarily from management's perspective and may not contain all information that is of importance to the reader. Accordingly, the information should be considered in
the context of the consolidated financial statements and other related information contained herein. Net income was down slightly for the three and nine months ended December 31, 2006. Net income totaled $1,042,000 and $3,148,000 for the quarter and nine months ended December 31, 2006 compared to
$1,059,000 and $3,263,000 for the December 31, 2005 quarter and nine months, respectively. The decreases were due primarily to increases in noninterest expenses, the provision for loan losses and
income taxes, partially offset by an increase in net interest income and noninterest income. The increases in noninterest expenses resulted primarily from higher compensation and benefits associated with additional loan personnel and the additional personnel needed to staff the branch
opened in April, 2006. The increase in the loan loss provision was attributable primarily to the $25.5 million growth we experienced in our loan portfolio. In addition, we were subject to a higher
effective tax rate during the three and nine months ended December 31, 2006 due to a tax credit we received during the prior period, resulting in an increase in income taxes paid. The increase in
noninterest income during the current periods is related primarily to increased activity in deposit transaction accounts. Service charges, fees and commissions increased $106,000, or 16.4%, to
$747,578, and $210,000, or 10.8%, to $2.1 million for the three and nine months ended December 31, 2006, respectively, compared to the same periods during the prior year. Net interest income for the quarter ended December 31, 2006 increased $79,000, or 2.2%, to $3.6 million and for the nine months ended December 31, 2006 increased $317,000, or 3.0%, to $10.9
million compared to the comparable periods last year. Net interest income, which is the interest income we earn on our interest-earning assets, such as loans and investment securities, and the
interest we pay on interest-bearing liabilities, which are primarily deposits and borrowings was impacted by both the change in our volume of interest earning assets and the interest rate spread
between interest-earning assets and interest-bearing liabilities. The primary factor contributing to the increase in net interest income for the quarter and nine months ended December 31, 2006 was
the growth in interest-earning assets, primarily loans, which was offset by a compressing interest rate spread. The decrease in the interest rate spread is due primarily to the current market
relationship between short-term and long-term interest rates. We also did not purchase any investment securities during the nine months ended December 31, 2006 and anticipate limited security
purchases during the remainder of the current fiscal year. Management will continue to monitor asset growth to manage the level of regulatory capital and funds acquisition. We continue to monitor the
impact rising interest rates may have on both the growth




in interest-earning assets and our interest rate spread. The Bank has approximately $176.8 million in adjustable rate loans or 46% of total
loans which reprice in five years or less, many of which are subject to annual and lifetime interest rate limits. The pace and extent of future interest rate changes will impact the Company's
interest rate spread as well as limitations on interest rate adjustments on certain adjustable rate loans.

Funding for the growth in interest-earning assets combined with a rising interest rate environment has impacted the composition of our interest-bearing liabilities. The primary source of funding
for increases in assets during the December 31, 2006 quarter was deposits due both to the seasonal nature of checking account balances and more competitive time deposit rates. Management plans to
remain competitive in our deposit pricing and anticipates that deposit growth will be the primary source of funding for asset growth during the remainder of the current fiscal year. As interest rates
have increased, deposit balances in savings and money market accounts have decreased as customers have transferred funds to time deposits or equities markets. Management is cognizant of the potential
for additional compression in the Bank's margin related to the need to acquire funds and the pace of interest rate changes. Management will continue to monitor the level of deposits and borrowings in
relation to the current interest rate environment. On July 26, 2006, we declared a 2 for 1 stock split in the form of a 100% stock dividend payable on August 23, 2006. The Board of Directors and management anticipate the effects of the split will
positively impact the liquidity of the Company's stock by increasing the number of shares outstanding and lowering the per share purchase price of our common stock.


**CRITICAL ACCOUNTING POLICIES**

**General**

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (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. 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 No. 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. The allowance for loan losses is maintained at a level considered by management to be adequate to absorb future loan losses currently inherent in the loan portfolio. Management's




assessment of the
adequacy of the allowance is based upon type and volume of the loan portfolio, past loan loss experience, existing and anticipated economic conditions, and other factors which deserve current
recognition in estimating future loan losses. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
Additions to the allowance are charged to operations. Subsequent recoveries, if any, are credited to the allowance. Loans are charged-off partially or wholly at the time management determines
collectibility is not probable. Management's assessment of the adequacy of the allowance is subject to evaluation and adjustment by the Company's regulators.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as doubtful, substandard or special mention. For such loans that
are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of
that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties
that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the
methodologies for estimating specific and general losses in the portfolio. A loan is considered impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting
scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the
delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis
for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value
of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Corporation does not separately
identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement.


**FINANCIAL CONDITION**

The Company's total assets increased $27.5 million to $450.1 million at December 31, 2006 from $422.6 million at March 31, 2006 due to an increase in loans receivable of $25.5 million. This
increase was funded with increases in both borrowings and deposits which increased $7.0 million and $15.6 million, respectively at December 31, 2006, from March 31, 2006. Deposits increased due
primarily to customers' preferences for high interest rate time deposits compared to savings and money market accounts. The increase in deposits was due to an increase




in time deposits of $24.5
million and partially offset by a decrease in checking accounts of $2.0 million, money market accounts of $1.6 million and savings accounts of $5.2 million. Stockholders' equity increased $3.1
million to $38.2 million at December 31, 2006, from $35.2 million at March 31, 2006, due to earnings for the nine month period ended December 31, 2006 and an increase in the net unrealized gain on
securities available for sale offset by three cash dividend payments.

At December 31, 2006, non-performing assets totaled approximately $1.4 million or .31% of assets compared to $589,000 or .14% of assets at March 31, 2006. Non-performing assets at December 31,
2006 were comprised primarily of loans 90 days or more delinquent which totaled $1.25 million. At December 31, 2006, our allowance for loan losses to non-performing loans was 213.6% and to total
loans was .77%. 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 December 31, 2006, there were also $1.7 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 residential real estate loans. No individual loan in this category has a balance that exceeds $201,000.


**LIQUIDITY AND CAPITAL RESOURCES**

Our principal sources of funds are customer deposits, advances from the Federal Home Loan Bank of Atlanta, amortization and prepayment 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. Management believes that the Bank will continue to have adequate liquidity for the foreseeable future. Cash flow
projections are regularly reviewed and updated to assure that adequate liquidity is provided. As of December 31, 2006, the Bank's liquidity ratio (liquid assets as a percentage of net withdrawable
savings and current borrowings) was 9.6%. At December 31, 2006, we had commitments to purchase or originate $12.2 million of loans. Certificates of deposit scheduled to mature in one year or less at December 31, 2006, totaled $179.2
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. At December 31, 2006, we did not have brokered or internet time deposits.




**RESULTS OF OPERATIONS**

**Three Months Ended December 31, 2006 and 2005.**

***General.*** Net income for the three months ended December 31, 2006 was $1,042,000 compared to $1,059,000 for the three months ended December 31, 2005. Net interest income
increased $79,000, and non-interest income increased $98,000 during the three months ended December 31, 2006 compared to the same period in 2005. Return on equity for the three months ended December
31, 2006 was 11.51% compared to 12.59% for the three month period ended December 31, 2005. Return on assets was 0.95% for quarter ended December 31, 2006 compared to 1.03% for the same period in the
previous fiscal year. ***Interest Income.*** Total interest income increased by $1.3 million to $7.5 million for the three months ended December 31, 2006, from $6.2 million for the three months
ended December 31, 2005, due to both higher average loan balances, and higher yields for the three months ended December 31, 2006 as compared to the period ended December 31, 2005. The increase in
yields was due to higher market interest rates generally. The average yield earned on interest-earning assets was 7.01% for the three months ended December 31, 2006 compared to 6.39% for the three
months ended December 31, 2005. ***Interest Expense.*** Total interest expense increased by $1.2 million to $3.9 million for the quarter ended December 31, 2006, from $2.7 million for the quarter ended
December 31, 2005. Interest on deposits increased by $886,000 to $2.7 million for the quarter ended December 31, 2006 from $1.8 million for the quarter ended December 31, 2005 due to an increase in
the average rate paid and higher average deposit balances. Interest expense on borrowed money increased by $296,000 to $1.2 million for the quarter ended December 31, 2006, from $908,000 for the
quarter ended December 31, 2005, due to an increase in the average rate paid and average balance of borrowings. The average balance for borrowings increased from $85.9 million for the December 31,
2005 quarter to $91.4 million for the December 31, 2006 period while the rate paid on borrowings increased from 4.19% to 5.18% for the same periods. The average rate paid on interest-bearing
liabilities was 3.56% during the three months ended December 31, 2006 compared to 2.86% for the three months ended December 31, 2005. ***Provision for Loan Losses.*** The provision for loan losses increased by $87,000 to $101,000 for the three months ended December 31, 2006, from $14,000 for the three months
ended December 31, 2005. The increase in the provision for loan losses for the quarter ended December 31, 2006 was due to the inherent risk associated with the increase in our loan portfolio. 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 or cash flows has occurred, as a
result of which the value of the collateral or cash flows 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. At December 31, 2006, management believes its allowance for
loan losses was adequate to absorb any probable losses inherent in the Company's loan portfolio. 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 increased by $98,000 to $840,000 for the three months ended December 31, 2006, from $741,000 for the three months ended December
31, 2005 due primarily to an increase in service charges and fees on transaction accounts. The Bank has established relationships with other institutions where the Bank receives fees in return for
completed customer mortgage loan applications for the institution's approval and funding. We anticipate this relationship will continue to be a source of fee and service charge income for the
Bank. ***Noninterest Expense.*** Noninterest expense increased by $62,000 to $2.8 million for the three months ended December 31, 2006 compared to the same period last year. The
increase is attributable to compensation and benefits, which increased by $87,000 to $1.7 million compared to the same period last year. The increase in compensation and benefits resulted from the
hiring of additional loan personnel and an additional branch location. ***Taxes.*** Taxes increased by $45,000 to $514,000 for the three months ended December 31, 2006, from $468,000 for the three months ended December 31, 2005. The effective tax
rate increased from 30.7% for the December 31, 2005 quarter to 33.0% for the December 31, 2006 quarter due to a tax credit for the fiscal year March 31, 2006.


**Nine Months Ended December 31, 2006 and 2005**

***General.*** Net income for the nine months ended December 31, 2006 decreased to $3,148,000 compared to $3,263,000 for the nine months ended December 31, 2005 due primarily
to an increase in noninterest expenses offset by an increase in net interest income. Income before income taxes decreased to $4.7 million for the nine months ended December 31, 2006 from $4.8 million
for the same period in the prior year. Return on equity for the nine months ended December 31, 2006 was 11.52% compared to 13.26% for the nine month period ended December 31, 2005. Return on assets
was .96% for nine months ended December 31, 2006 compared to 1.07% for the same period in the previous fiscal year. ***Interest Income.*** Total interest income increased to $21.7 million for the nine months ended December 31, 2006, from $18.0 million for the nine months ended December 31,
2005, due to both an increase in the average loan balances and an increase in the yield on loans during the period. The yield on loans and securities increased from 6.17% to 6.88% for the same
periods. ***Interest Expense.*** Total interest expense increased by $3.4 million to $10.8 million for the nine months ended December 31, 2006, from the nine months ended December 31,
2005. Interest on deposits increased to $7.2 million for the nine months ended December 31, 2006, from $4.9 million for the same period last year due to both an increase in the average deposit
balances and the average rate on deposit balances. The rate paid on deposits increased from 2.32% for the nine months ended December 31, 2005 to 3.13% for the same period in the current fiscal year.
Interest




expense on borrowed money increased to $3.6 million for the nine months ended December 31, 2006 from $2.4 million for the nine months ended December 31, 2005, due to both an increase in the
average outstanding balance on borrowings and an increase in the average rate on borrowing balances. The average balance on borrowings increased from $86.9 million for the nine months ended December
31, 2005 to $91.5 million for the current nine month period. The average rate paid on borrowings increased from 3.71% for the nine months ended December 31, 2005 to 5.19% for the nine month period
ended December 31, 2006.

***Provision for Loan Losses.*** The provision for loan losses increased to $223,000 for the nine months ended December 31, 2006 from $137,000 for the same period last year.
The increase in the provision for loan losses for the nine months ended December 31, 2006, was due to the inherent risk associated with the increase in our loan portfolio. ***Noninterest Income.*** Noninterest income increased to $2.4 million for the nine months ended December 31, 2006, from $2.3 million for the nine months ended December 31,
2005, due primarily to an increase in fee income related to transaction accounts. Noninterest income during the 2005 period included a $55,000 gain on the sale of a real estate lot. ***Noninterest Expenses.*** Noninterest expenses increased $451,000 for the nine months ended December 31, 2006, compared to the same period last year. The increase is
attributable to compensation and benefits, which increased by $370,000 to $5.1 million compared to the same period last year. The increase in compensation and benefits resulted primarily from the
hiring of additional loan officers and an additional branch location. ***Taxes.*** Taxes increased to $1,551,000 for the nine months ended December 31, 2006, from $1,511,000 for the nine months ended December 31, 2005. The effective tax rate increased from 31.6% for the December 31, 2005 period to 33.0% for the same period ended December 31, 2006
due to a tax credit for the fiscal year March 31, 2006.


**RECENT ACCOUNTING PRONOUNCEMENTS**

In September 2006, the Securities and Exchange Commission (SEC) released Staff Accounting Bulletin No. 108 (SAB 108). SAB 108 expresses the SEC staff's views regarding the process of quantifying
financial statement misstatements. SAB 108 expresses the SEC staff's view that a registrant's materiality evaluation of an identified unadjusted error should quantify the effects of the error on each
financial statement and related financial statement disclosures and that prior year misstatements should be considered in quantifying misstatements in current year financial statements. SAB 108 also
states that correcting prior year financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files
the prior year financial statements. The cumulative effect of the initial application should be reported in the carrying amounts of assets and liabilities as of the beginning of that fiscal year and
the offsetting adjustment should be made to the opening balance of retained earnings for that year. Registrants should disclose the nature and amount of each individual error being corrected in the
cumulative adjustment. The SEC staff encourages




early application of the guidance in SAB 108 for interim periods of the first fiscal year ending after November 15, 2006**.** The Company
does not expect the implementation of SFAS 108 to have a material impact on its financial statements.

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial Instruments - an amendment of
FASB Statements No. 133 and 140" (SFAS 155). SFAS 155 permits fair value measurement of any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation.
The Statement also clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133. It establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation. SFAS 155 also
clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives. SFAS 155 is effective for all financial instruments acquired or issued after the beginning of
an entity's first fiscal year that begins after September 15, 2006. The Company does not expect the implementation of SFAS 155 to have a material impact on its *consolidated* financial
statements. In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, "Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140" (SFAS 156). SFAS 156
requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into certain servicing contracts. The Statement
also requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable. SFAS 156 permits an entity to choose between the
amortization and fair value methods for subsequent measurements. At initial adoption, the Statement permits a one-time reclassification of available for sale securities to trading securities by
entities with recognized servicing rights. SFAS 156 also requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial
position and additional disclosures for all separately recognized servicing assets and servicing liabilities. This Statement is effective as of the beginning of an entity's first fiscal year that
begins after September 15, 2006. The Company does not expect the implementation of SFAS 156 to have a material impact on its *consolidated* financial statements. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements but may change current
practice for some entities. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. The Company does not
expect the implementation of SFAS 157 to have a material impact on its *consolidated* financial statements. Standards No. 158, "Employers' Accounting for In September 2006, the FASB issued Statement of Financial Accounting Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (SFAS 158). SFAS 158 requires




an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability
in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The funded status of a benefit plan will be
measured as the difference between plan assets at fair value and the benefit obligation. For a pension plan, the benefit obligation is the projected benefit obligation. For any other postretirement
plan, the benefit obligation is the accumulated postretirement benefit obligation. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement
of financial position. The Statement also requires additional disclosure in the notes to financial statements about certain effects on net periodic benefit cost for the next fiscal year that arise
from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The Company is required to initially recognize the funded status of a defined
benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006.The requirement to measure plan assets and benefit obligations as
of the date of the employers' fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The Company does not expect the implementation of SFAS 158
to have a material impact on its *consolidated* financial statements.

In June 2006, the FASB issued Interpretation No. 48, *"Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109"* (FIN 48). FIN 48 clarifies
the accounting for uncertainty in income taxes recognized in an entity's financial statements in accordance with SFAS 109. The Interpretation prescribes a recognition threshold and measurement
principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return that are not certain to be realized. FIN 48 is effective for fiscal
years beginning after December 15, 2006. The Company does not expect the implementation of SFAS 157 to have a material impact on its financial statements. In September 2006, the Emerging Issues Task Force issued EITF 06-4, "Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements." This consensus concludes that for a split-dollar life insurance arrangement within the scope of this Issue, an employer should recognize a liability for future benefits in accordance
with FASB Statement No. 106 (if, in substance, a postretirement benefit plan exits) or APB Opinion No. 12 (if the arrangement is, in substance, an individual deferred compensation contract) based on
the substantive agreement with the employee. The consensus is effective for fiscal years beginning after December 15, 2007. The company is currently evaluating the effect that EITF No. 06-4 will have
on its *consolidated* financial statements when implemented. In September 2006, The Emerging Issues Task Force issued EITF 06-5, "Accounting for Purchases of Life Insurance- Determining the Amount That Could Be Realized in Accordance with FASB Technical
Bulletin No. 85-4 ." This consensus concludes that a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other than the cash surrender
value in determining the amount that could be realized under the insurance contract. A consensus also was reached that a policyholder should determine the amount that could be realized under the life
insurance contract assuming the surrender of an individual-life by




individual-life policy (or certificate by certificate in a group policy). The consensuses are effective for fiscal years beginning
after December 15, 2006. The company is currently evaluating the effect that EITF No. 06-5 will have on its *consolidated* financial statements when implemented.

**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, 2006 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, 2006.


|**ITEM 4.** | **Controls and Procedures**
|----------- | ---------------------------

An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) as of December 31, 2006, 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 in effect were 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 December 31, 2006, that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting. The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all error and all fraud. A control procedure, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no
evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons,
by collusion of two or more people, or by override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or
the degree of compliance with the policies or




procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and
not be detected.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and annually report on their systems of internal control over financial reporting. In addition, our independent
accountants must report on management's evaluation. We are in the process of evaluating, documenting and testing our system of internal control over financial reporting to provide the basis for our
report that will, for the first time, be a required part of our annual report on Form 10-K for the fiscal year ending March 31, 2008. Due to the ongoing evaluation and testing of our internal
controls, there can be no assurance that if any control deficiencies are identified they will be remediated before the end of the 2008 fiscal year, or that there will not be significant deficiencies
or material weaknesses that would be required to be reported.




PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

Not Applicable.


Item 1A.  Risk Factors

No material changes from risk factors as previously disclosed in Form 10-K.


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

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

See Exhibit Index




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 12, 2007 | By: | /s/ R. Jerry Giles                                              
|                        |     | R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer)



**EXHIBIT INDEX**

|ExhibitNumber |  | 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 May 5, 2006 as Exhibit 99.1 to the Registrant's Current Report on Form 8-K (SEC File No. 000-18265), is incorporated herein by reference.                                                                                                          
|4             |  | Registrant's Specimen Common Stock Certificate, filed on June 29, 1999 as Exhibit 4 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          |  | Amended and Restated Employment Agreement by and between Community Bank and P. Douglas Richard, filed on May 5, 2006, as Exhibit 99.2 to the Registrant's Current Report on Form 8-K (SEC File No.
000-18265), is incorporated herein by reference.                                                     
|10.2          |  | Form of Change in Control Agreement by and between Community Financial Corporation and each of P. Douglas Richard and Chris P. Kyriakides, filed on May 5, 2006 as Exhibit 99.4 to the Registrant's
Current Report on Form 8-K (SEC File No. 000-18265), is incorporated herein by reference.           
|10.3          |  | 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.                                                                                                     
|10.4          |  | Amended and Restated Employment Agreement by and between Community Bank and Chris P. Kyriakides, filed on May 5, 2006 as Exhibit 99.3 to the Registrant's Current Report on Form 8-K (SEC File No.
000-18265), is incorporated herein by reference.                                                     
|10.5          |  | Form of Change in Control Agreement by and between Community Bank and each of R. Jerry Giles, Norman C. Smiley, Benny N. Werner, filed on May 5, 2006 as Exhibit 99.5 to the Registrant's Current
Report on Form 8-K (SEC File No. 000-18265), is incorporated herein by reference.                     
|10.6          |  | Retirement Agreements by and between Community Bank and Non-Employee Directors filed on June 29, 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, and incorporated here by reference.                             
|10.7          |  | Form of First Amendment to the Retirement Agreements by and between Community Bank and Non-Employee Directors, filed on June 29, 2005 as an exhibit to the Registrant's Annual Report on Form 10-K
(SEC File No. 000-18265) for the fiscal year ended March 31, 2005, is incorporated here by reference.



|ExhibitNumber |  | Document                                                                                                                                                                                                                                                                                                                             
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                                                                                                                                                                      
|10.8          |  | Salary Continuance Agreements by and between Community Bank and Officers Richard, Kyriakides, Giles, Smiley and Werner filed on June 29, 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, and incorporated here by reference.                  
|10.9          |  | Form of Director Deferred Fee Agreement, as amended, filed on June 29, 2005 as an exhibit to the Registrant's Annual Report on Form 10-K (SEC File No. 000-18265) for the fiscal year ended March
31, 2005, is incorporated here by reference.                                                                                       
|10.10         |  | Registrant's 2003 Stock Option and Incentive Plan, filed on September27, 2003 as an exhibit to the Registrant's Definitive Proxy Statement on Schedule 14A (SEC File No. 000-18265), is
incorporated herein by reference.                                                                                                            
|10.11         |  | Form of Incentive Stock Option Agreement and Non-Qualified Stock Option Agreement for Registrant's 2003 Stock Option and Incentive Plan, filed on August 12, 2005 as an exhibit to the Registrant's
Quarterly Report on Form 10-Q (SEC File No. 000-18265) for the quarter ended June 30, 2005, are incorporated herein by reference.
|11            |  | Statement re computation of per share earnings (see Note 12 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K).                                                                                                                                                                
|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                                                                                                                                                                                                                                                                                                          
|              |  |                                                                                                                                                                                                                                                                                                                                      
|              |  |                                                                                                                                                                                                                                                                                                                                      
|              |  |