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

**FORM 10-Q**

|   | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934        
|-- | ----------------------------------------------------------------------------------------
|   | For the quarterly period ended June 30, 2005                                            
|OR
|   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|   | For the transition period from __________________ to ___________________                

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

---

---

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

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

Number of shares of Common Stock, par value $.01 per share, outstanding at the close of business on August 5, 2005:  2,095,706.

COMMUNITY FINANCIAL CORPORATION

INDEX

|PART I.       | FINANCIAL INFORMATION                                                                               |   
|------------- | --------------------------------------------------------------------------------------------------- | --
|Item 1.       | Consolidated Financial Statements                                                                   |   
|              | Consolidated Statements of Financial
Condition at June 30, 2005 (unaudited)
and March 31, 2005      | 3 
|              | Consolidated Statements of Income for the
Three Months Ended June 30, 2005 and 2004
(unaudited)     | 4 
|              | Consolidated Statements of Cash Flows for the
Three Months Ended June 30, 2005 and 2004 (Unaudited) | 5 
|              | Notes to Unaudited Interim Consolidated
Financial Statements                                        | 6 
|Item 2.       | Management's Discussion and Analysis of Financial Condition
and Results of Operations               | 9 
|Item 3.       | Quantitative and Qualitative Disclosures About Market Risk                                          | 13
|Item 4.       | Controls and Procedures                                                                             | 13
|PART II.      | OTHER INFORMATION                                                                                   | 14
|Exhibit Index | 16                                                                                                 

Part I. Financial Information

Item 1. Financial Statements

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

|                                                                                                                       | June 302005(Unaudited) | March 312005
|---------------------------------------------------------------------------------------------------------------------- | ---------------------- | ------------
|ASSETS                                                                                                                 |                        |             
|Cash (including interest-bearing   deposits of approximately   $1,012,000 and $1,555,000)                              | $ 4,079,333            | $ 2,345,769 
|Securities                                                                                                             |                        |             
|Held to maturity                                                                                                       | 25,538,036             | 26,630,865  
|Available for sale                                                                                                     | 13,913,012             | 13,496,728  
|Restricted investment in Federal   Home Loan Bank stock, at cost                                                       | 4,048,700              | 4,228,700   
|Loans receivable, net of allowance   for loan losses of $3,141,428 and   $3,021,493                                    | 341,545,167            | 336,808,373 
|Real estate owned                                                                                                      | 130,323                | 138,114     
|Property and equipment, net                                                                                            | 7,858,815              | 7,845,945   
|Accrued interest receivable                                                                                            |                        |             
|Loans                                                                                                                  | 1,332,501              | 1,262,333   
|Investments                                                                                                            | 592,526                | 598,649     
|Prepaid expenses and other assets                                                                                      | 5,836,954              | 6,248,506   
|Total Assets                                                                                                           | $404,875,367           | $399,603,982
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                   |                        |             
|Liabilities                                                                                                            |                        |             
|Deposits                                                                                                               | $283,445,310           | $275,430,388
|Advances from Federal Home Loan      Bank                                                                              | 72,000,000             | 76,000,000  
|Securities sold under agreement to      repurchase                                                                     | 15,428,910             | 15,650,497  
|Advance payments by borrowers for      taxes and insurance                                                             | 65,126                 | 167,437     
|Other liabilities                                                                                                      | 1,375,932              | 1,030,576   
|Total Liabilities                                                                                                      | 372,315,278            | 368,278,898 
|Stockholders' Equity                                                                                                   |                        |             
|Preferred stock $.01 par value,      authorized 3,000,000 shares,      none outstanding                                | ---                    | ---         
|Common stock, $.01 par value,      authorized 10,000,000 shares,      2,091,106 and 2,085,106 shares       outstanding | 20,911                 | 20,851      
|Additional paid in capital                                                                                             | 4,379,472              | 4,292,815   
|Retained earnings                                                                                                      | 26,838,312             | 25,948,758  
|Accumulated other comprehensive      income                                                                            | 1,321,394              | 1,062,660   
|Total Stockholders' Equity                                                                                             | 32,560,089             | 31,325,084  
|Total Liabilities and             Stockholders' Equity                                                                 | $404,875,367           | $399,603,982

See accompanying notes to unaudited interim consolidated financial statements.

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

|                                                   | Three Months EndedJune 30,
|-------------------------------------------------- | --------------------------
|                                                   | 2005                      
|INTEREST AND DIVIDEND INCOME                       |                           
|Loans                                              | $5,292,303                
|Investment securities                              | 269,449                   
|Other                                              | 248,848                   
|Total interest income                              | 5,810,600                 
|INTEREST EXPENSE                                   |                           
|Deposits                                           | 1,473,962                 
|Borrowed money                                     | 733,044                   
|Total interest expense                             | 2,207,006                 
|NET INTEREST INCOME                                | 3,603,594                 
|PROVISION FOR LOAN LOSSES                          | 125,156                   
|NET INTEREST INCOME AFTERPROVISION FOR LOAN LOSSES | 3,478,438                 
|NONINTEREST INCOME                                 |                           
|Service charges, fees      and commissions         | 648,994                   
|Miscellaneous                                      | 145,137                   
|Total noninterest income                           | 794,131                   
|NONINTEREST EXPENSE                                |                           
|Compensation & benefits                            | 1,562,320                 
|Occupancy                                          | 325,801                   
|Data processing                                    | 280,086                   
|Federal insurance premium                          | 9,455                     
|Miscellaneous                                      | 417,650                   
|Total noninterest expense                          | 2,595,312                 
|INCOME BEFORE TAXES                                | 1,677,257                 
|INCOME TAXES                                       | 558,012                   
|NET INCOME                                         | $ 1,119,245               
|BASIC EARNINGS PER SHARE                           | $ 0.54                    
|DILUTED EARNINGS PER SHARE                         | $ 0.51                    
|DIVIDENDS PER SHARE                                | $ 0.11                    

See accompanying notes to unaudited interim consolidated financial statements.

COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                      | Three Months EndedJune 30
|------------------------------------------------------------------------------------- | -------------------------
|                                                                                      | 2005                     
|                                                                                      | (Unaudited)              
|OPERATING ACTIVITIES                                                                  |                          
|Net income                                                                            | $1,119,245               
|Adjustments to reconcile net income to      net cash provided by operating activities |                          
|Provision for loan losses                                                             | 125,156                  
|Depreciation                                                                          | 131,351                  
|Amortization of premium and accretion            of discount on securities, net       | 2,829                    
|Increase in net deferred loan fees                                                    | 5,394                    
|Increase (decrease) in deferred income taxes                                          | (23,275)                 
|(Increase) decrease in other assets                                                   | 347,507                  
|Increase in other liabilities                                                         | 108,770                  
|Net cash provided by operating               activities                               | 1,816,977                
|INVESTING ACTIVITIES                                                                  |                          
|Proceeds from maturities of held to      maturity securities                          | 1,090,000                
|Purchases of investment securities                                                    | --                       
|Net increase in loans                                                                 | (4,867,344)              
|Purchases of property and equipment                                                   | (144,221)                
|(Purchase) redemtion of FHLB stock                                                    | 180,000                  
|Decrease in Real Estate Owned                                                         | 7,791                    
|Net cash absorbed by investing         activities                                     | (3,733,774)              
|FINANCING ACTIVITIES                                                                  |                          
|Dividends paid                                                                        | (229,692)                
|Net increase in deposits                                                              | 8,014,922                
|Proceeds from advances and other      borrowed money                                  | 91,660,836               
|Repayments of advances and other      borrowed money                                  | (95,882,422)             
|Proceeds from issuance of common stock                                                | 86,717                   
|Net cash provided by      financing activities                                        | 3,650,361                
|INCREASE (DECREASE) IN CASH AND CASH   EQUIVALENTS                                    | 1,733,564                
|CASH AND CASH EQUIVALENTS-beginning of period                                         | 2,345,769                
|CASH AND CASH EQUIVALENTS-end of period                                               | $4,079,333               

See accompanying notes to unaudited interim consolidated financial statements.

COMMUNITY FINANCIAL CORPORATION
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005

**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 months ended June 30, 2005, are not necessarily indicative of the results that may be expected for the year ending March 31,
2006.

**NOTE 2. - STOCK-BASED COMPENSATION PLAN**

At June 30, 2005, the Company had a stock-based employee compensation plan. The Company accounts for the plan under the recognition and measurement principles of
APB Opinion No. 25, *Accounting for Stock Issued to Employees*, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under
those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The Company applies the fair value recognition provisions of SFAS No. 123, *Accounting for Stock-Based Compensation*, to stock-based employee compensation. The value of each grant is estimated at the grant date using the Black-Scholes option-pricing model. No proforma
compensation expense is disclosed for the quarters ended June 30, 2005 and 2004 as no options were granted during those periods and options outstanding are fully vested.

**NOTE 3. - EARNINGS PER SHARE**

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

|                                          | For the Three Months Ended
|----------------------------------------- | --------------------------
|                                          | June 30, 2005             
|                                          | Income                    
|Basic EPS                                 |                           
|Income available to   common stockholders | $1,119,245                
|Effect of Dilutive   Securities           |                           
|Options                                   | ---                       
|Diluted EPS                               |                           
|Income available to   common stockholders | $1,119,245                

During the quarter ended June 30, 2005, stock options representing 49,000 shares were not included in the calculation of earnings per share because they would have
been anti-dilutive. No stock options were excluded for the quarter ended June 30, 2004.

**NOTE 4. - STOCKHOLDERS' EQUITY**

The following table presents the Bank's regulatory capital levels at June 30, 2005:

|                   | AmountRequired | PercentRequired | ActualAmount | ActualPercent | ExcessAmount
|------------------ | -------------- | --------------- | ------------ | ------------- | ------------
|Tangible Capital   | $ 6,092,000    | 1.50%           | $29,672,000  | 7.31%         | $23,580,000 
|Core Capital       | 16,246,000     | 4.00            | 29,672,000   | 7.31          | 13,426,000  
|Risk-based Capital | 25,286,000     | 8.00            | 33,721,000   | 10.67         | 8,435,000   

The 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 5. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS**

Total interest paid for the three months ended June 30, 2005 and 2004 was $2,214,541 and $1,398,686, respectively. Total income taxes paid for the three months
ended June 30, 2005 and 2004 was $150,584 and $0.

**NOTE 6. - COMPREHENSIVE INCOME**

Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners." Comprehensive income for the
Company includes net income and unrealized gains and losses on securities available for sale. The following tables set forth the components of comprehensive income for the three-month periods ended
June 30, 2005 and 2004:

|                                                                    | Three months Ended June 30
|------------------------------------------------------------------- | --------------------------
|                                                                    | 2005                      
|(Amounts in thousands)                                              |                           
|Net income                                                          | $1,119,245                
|Other comprehensive income,   net of tax                            |                           
|Unrealized gains (losses) on securities:                            |                           
|Unrealized holding gains (losses)         arising during the period | 258,734                   
|Total comprehensive income                                          | $1,377,979                

**NOTE 7. - DEFINED BENEFIT PENSION PLAN**

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

|                               | Three months Ended June 30
|------------------------------ | --------------------------
|                               | 2005                      
|Service cost                   | $71,932                   
|Interest cost                  | 33,009                    
|Expected return on plan assets | (31,019)                  
|Recognized net actuarial loss  | 8,597                     
|                               | $82,519                   

As disclosed in the Company's Form 10-K for the year ended March 31, 2005, a contribution of $263,000 to its pension plan is expected during the current fiscal
year. As of June 30, 2005, no contributions have been made. The Company anticipates making all required contributions prior to March 31, 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.

Our operating results were impacted primarily by changes in 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. The change in net interest income is impacted by both the change
in 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 three month period ended June 30, 2005 has been the growth in interest-earning assets, primarily loans, which was offset by a compressing interest rate spread. The growth in loans has slowed from
previous quarters due primarily to efforts by management to moderate loan growth through pricing. We also did not purchase any investment securities during the June 30, 2005 quarter 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. While the
Company maintains an acceptable interest rate risk position, our interest rate spread has been compressed due to the current market relationship between short-term and long-term interest rates. 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 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 the Company's interest-bearing
liabilities. During the fiscal year ended March 31, 2005, the primary source of funding for increases in assets was borrowings. The primary source of funding for increases in assets during the June
30, 2005 quarter was deposits, which was due to our being more competitive on deposit pricing in our market areas. Management plans to remain competitive in our deposit pricing and anticipates that
deposits growth will be the primary source of funding for asset growth during 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.

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 $5.3 million to $404.9 million at June 30, 2005 from $399.6 million at March 31, 2005 due to an increase in loans receivable
of $4.7 million. These increases were funded with deposits which increased $8.0 million at June 30, 2005, from March 31, 2005. The increase in deposits was due primarily to more competitive pricing
by the Bank on time deposits and money market accounts. The increase in deposits was due to an increase in money market accounts of $2.8 million and time deposits of $9.0 million which was partially
offset by a decrease in savings accounts of $3.2 million and checking accounts of $600,000. Stockholders' equity increased $1.2 million to $32.5 million at June 30, 2005, from $31.3 million at March
31, 2005, due to earnings for the three month period ended June 30, 2005 and an increase in the net unrealized gain on securities available for sale offset by a payment of $0.11 per share in cash
dividends.

At June 30, 2005, non-performing assets totaled approximately $569,000 or .14% of assets compared to $548,000 or .14% of assets at March 31, 2005. Non-performing
assets at June 30, 2005 were comprised primarily of loans 90 days or more delinquent which totaled $439,000. At June 30, 2005, our allowance for loan losses to non-performing loans was 552.1% and to
total loans was .91%. Based on current market values of the properties securing these loans, management anticipates no significant losses in excess of the allowance for losses previously
recorded.

As of June 30, 2005, there were also $2.2 million in loans with respect to which known information about the possible credit problems of the borrowers or the
cash flows of the security properties have caused management to have doubts as to the ability of the borrowers to comply with present loan repayment terms and which may result in the future inclusion
of such items in the non-performing loan categories. These loans are comprised primarily of commercial real estate loans. No individual loan in this category has a balance that exceeds $212,000.

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 June 30, 2005, the Bank's liquidity ratio (liquid assets as a
percentage of net withdrawable savings and current borrowings) was 5.3**%.**

At June 30, 2005, we had commitments to purchase or originate $13.8 million of loans. Certificates of deposit scheduled to mature in one year or less at June 30,
2005, totaled $65.8 million. Based on our historical experience, management believes that a significant portion of such deposits will remain with us. Management further believes that loan repayments
and other sources of funds will be adequate to meet our foreseeable short-term and long-term liquidity needs.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2005 and 2004.

General. Net income for the three months ended June 30, 2005 was $1,119,000 compared to $892,000 for the three months ended June 30, 2004, an increase of
$227,000. Net interest income increased $385,000, and non-interest income

increased $117,000 during the three months ended June 30, 2005 compared to the same period in 2004. Return on equity for the
three months ended June 30, 2005 was 14.02% compared to 12.21% for the three month period ended June 30, 2004. Return on assets was 1.11% for quarter ended June 30, 2005 compared to 1.03% for the
same period in the previous fiscal year.

Interest Income. Total interest income increased by $1.2 million to $5.8 million for the three months ended June 30, 2005, from $4.6 million for the three months
ended June 30, 2004, due to both higher average loan and security balances, and higher yields for both investment securities and loans for the three months ended June 30, 2005 as compared to the
period ended June 30, 2004. The increase in yields was due to higher market interest rates generally. The average yield earned on interest-earning assets was 6.01% for the three months ended June 30,
2005 compared to 5.55% for the three months ended June 30, 2004.

Interest Expense. Total interest expense increased by $858,000 to $2.2 million for the quarter ended June 30, 2005, from $1.3 million for the quarter ended June
30, 2004. Interest on deposits increased by $277,000 to $1.5 million for the quarter ended June 30, 2005 from $1.2 million for the quarter ended June 30, 2004 due to an increase in the average rate
paid and higher average deposit balances. Interest expense on borrowed money increased by $581,000 to $733,000 for the quarter ended June 30, 2005, from $152,000 for the quarter ended June 30, 2004,
due primarily to an increase in average borrowings and to a lesser extent an increase in the rate paid on borrowings. The average balance for borrowings increased form $50.4 million for the June 30,
2004 quarter to $91.1 million for the June 30, 2005 period while the rate paid on borrowings increased from 1.20% to 3.22% for the same periods. The average rate paid on interest-bearing liabilities
was 2.39% during the three months ended June 30, 2005 compared to 1.72% for the three months ended June 30, 2004.

Provision for Loan Losses. The provision for loan losses decreased by $39,000 to $125,000 for the three months ended June 30, 2005, from $164,000 for the three
months ended June 30, 2004.  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. 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 $117,000 to $794,000 for the three months ended June 30, 2005, from $677,000 for the three months ended June
30, 2004 due to an increase in loan fee and service charge income related to brokered loans. 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 $175,000 to $2.6 million for the three months ended June 30, 2005 compared to the same period last year.
The increase is attributable to compensation and benefits, which increased by $184,000 to $1.6 million compared to the same period last year.The increase in
compensation and benefits resulted from the hiring of additional loan officers and loan support personnel.

Taxes. Taxes decreased by $139,000 to $558,000 for the three months ended June 30, 2005, from $419,000 for the three months ended June 30, 2004. The effective
tax rate increased from 31.9% for the June 30, 2004 quarter to 33.3% for the June 30, 2005 quarter.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2005, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 154, "Accounting Changes and
Error Corrections - A Replacement of APB Opinion No. 20 and FASB Statement No. 3." The new standard changes the requirements for the accounting for and reporting of a change in accounting
principle. Among other changes, SFAS No. 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented based on the
new accounting principle, unless it is impracticable to do so. SFAS No. 154 also provides that (1) a change in method of depreciating or amortizing a long-lived nonfinancial asset be
accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be
termed a "restatement. " The new standard is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Corporation does not
anticipate this revision will have a material effect on its financial statements.

On December 16, 2004, FASB issued SFAS No. 123R (revised 2004), "Share-Based Payment," that addresses the accounting for share-based payment transactions in
which a company receives employee services in exchange for either equity instruments of the company or liabilities that are based on the fair value of the company's equity instruments or that may be
settled by the issuance of such equity instruments. SFAS No. 123R eliminates the ability to account for share-based compensation transactions using the intrinsic method and requires that such
transactions be accounted for using a fair-value-based method and recognized as expense in the statement of income. The effective date of SFAS No. 123R (as amended by the SEC) is for annual periods
beginning after June 15, 2005. The provisions of SFAS No. 123R do not have an impact on the Corporation's results of operations at the present time.

In March 2005, the SEC issued Staff Accounting Bulleting No. 107 (SAB 107). SAB 107 expresses the views of the SEC staff regarding the
interaction of FAS 123R and certain SEC rules and regulations and provides the SEC staff's view regarding the valuation of share-based payment arrangements for public companies. SAB 107 does not
impact the Corporation's results of operations at the present time.

In November 2004, the Emerging Issues Task Force (EITF) published Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments." The Task Force discussed the meaning of other-than-temporary impairment and its application to certain investments carried at cost. The Task Force requested that the FASB staff consider
other impairment models within U.S. Generally Accepted Accounting Principles (GAAP) when developing its views. The Task Force also requested that the scope of the impairment issue be expanded to
include equity investments and investments subject to SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and that the issue be addressed by the Task Force as a
separate EITF issue. At the EITF meeting, the Task Force reached a consensus on one issue that certain quantitative and qualitative disclosures should be required for securities accounted for under
SFAS No. 115 that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. The Board ratified the consensus on that one issue at its
November 25, 2004 meeting. In September 2004, FASB directed its staff to issue two proposed FASB Staff Positions (FSP): Proposed FSP EITF Issue 03-1-a, which provides guidance for the
application of paragraph 16 of EITF Issue 03-1 to debt securities that are impaired because of interest rate and/or sector spread increases, and Proposed FSP EITF Issue 03-1-b, which delays the
effective date of Issue 03-1 for debt securities that are impaired because of interest rate and/or sector spread increases. In June 2005, the FASB reach a decision whereby they declined to
provide additional guidance on the meaning of other-than-temporary impairment. The Board directed the FASB staff to issue EITF 03-1a as final and to draft a new FSP that will replace EITF 03-01. The
final FSP (retitled FAS 115-1, "The Meaning of Other-Than-Temporary Impairment and it Application to Certain Investments") would be effective for other-than-temporary impairment analysis conducted in
periods beginning after September 15, 2005. The Corporation does not anticipate this revision will have a material effect on its financial statements.

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, 2005 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, 2005.

Item 4.   Controls and Procedures

An evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) as of June
30, 2005, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and several other members of the Company's senior
management. The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it files or submits under the Act is: (i) accumulated and communicated to the Company's management (including the Chief Executive
Officer and Chief Financial Officer) in a timely manner and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In addition, there have
been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quarter ended June 30, 2005, 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, 2007. 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 2007 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 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: August 12, 2005 | By:                            



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

|Exhibit Number | Document                                                                                                                                                                                                                                                                                                                             
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.8           | Retirement Agreements by and between Community Bank and Non-Employee Directors Hickok, Smith, Andersen, Cooke, Fairchilds and Trimyer, 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, are incorporated herein by reference.
|10.9           | 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, are incorporated herein by reference.                           
|10.10          | 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, are incorporated herein by reference.                
|10.11          | 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, are incorporated herein by reference.                                                                                    
|10.12          | Form of Community Financial Corporation 2003 Stock Option and Incentive Plan, Incentive Stock Options Agreement and Non-Qualified Stock Option
Agreement.                                                                                                                                                                            
|11             | Statement re computation of per share earnings (see footnote 3 to the financial statements filed with this report).                                                                                                                                                                                                                  
|31.1           | Rule 13(a)-14(a) Certification (Chief Executive Officer)                                                                                                                                                                                                                                                                             
|31.2           | Rule 13(a)-14(a) Certification (Chief Financial Officer)                                                                                                                                                                                                                                                                             
|32             | Section 1350 Certifications