**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION****WASHINGTON, D.C. 20549****_______________________________________________**

**FORM 10-QSB**

[X]    	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES           EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000

[   ]    	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE          ACT OF 1934

For the transition period from ____________ to _____________.



******COMMUNITY FINANCIAL CORPORATION**

---

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

|38 North Central Ave., Staunton, VA      |  | 24401     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)

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

Number of shares of Common Stock, par value $.01 per share, outstanding at the close of business on August 7, 2000: 2,454,076

Transitional Small business Disclosure Format (check one): Yes [  ] No [X]

PART I.       	FINANCIAL INFORMATION PAGE

Item 1.         	Financial Statements

Consolidated Statements of Financial Condition             
       at June 30, 2000 (unaudited)                    and March 31, 2000 ................................................................................... 1

                    Consolidated Statements of Income for the               
     Three Months Ended June 30, 2000 and                    2000 (unaudited).........................................................................................  2

                    Consolidated Statements of Cash Flows for the              
      Three Months Ended June 30, 2000 and                    1999 (unaudited).........................................................................................  3

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

Item 2.	        Management's Discussion and Analysis of Financial                    Condition and Results
of Operations..........................................................  6

PART II.    	OTHER INFORMATION.........................................................................  10

**PART I - FINANCIAL INFORMATION**

**Item 1.	Financial Statements**



|                                                                                                                   | June 30,2000          | March 31,2000        
|------------------------------------------------------------------------------------------------------------------ | --------------------- | ---------------------
|ASSETS                                                                                                             | (Unaudited)           |                      
|Cash (including interest bearing  deposits of approximately  $2,671,692 and $1,908,000)                            | $  6,930,149          | $  7,424,577         
|Securities                                                                                                         |                       |                      
|Held to maturity                                                                                                   | 30,136,413            | 27,312,943           
|Available for sale                                                                                                 | 6,771,960             | 6,863,674            
|Investment in Federal Home Loan  Bank stock, at cost                                                               | 2,600,000             | 1,950,000            
|Loans receivable, net                                                                                              | 201,313,947           | 189,700,859          
|Real estate owned                                                                                                  | 577,517               | 823,002              
|Property and equipment, net                                                                                        | 6,450,695             | 6,627,869            
|Accrued interest receivable                                                                                        |                       |                      
|Loans                                                                                                              | 1,199,550             | 1,145,835            
|Investments                                                                                                        | 569,249               | 142,277              
|Prepaid expenses and other assets                                                                                  | 1,080,609             | 1,086,330            
|                                                                                                                   |                       |                      
|                                                                                                                   |                       |                      
|                                                                                                                   |                       |                      
|                                                                                                                   |                       |                      
|Total Assets                                                                                                       | $257,630,089========= | $243,077,366=========
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                               |                       |                      
|                                                                                                                   |                       |                      
|Liabilities                                                                                                        |                       |                      
|Deposits                                                                                                           | $158,239,863          | $158,568,275         
|Advances from Federal Home Loan Bank                                                                               | 52,000,000            | 37,000,000           
|Securities sold under agreement to Repurchase                                                                      | 20,000,000            | 20,000,000           
|Advance payments by borrowers for taxes and insurance                                                              | 157,690               | 226,195              
|Other liabilities                                                                                                  | $  2,059,041          | $  1,888,821         
|Total Liabilities                                                                                                  | 232,456,594           | 217,683,291          
|                                                                                                                   |                       |                      
|Shareholders' Equity                                                                                               |                       |                      
|Preferred stock, $.01 par value, authorized     3,000,000 shares; none outstanding                                 |                       |                      
|Common stock, $.01 par value, authorized     10,000,000 shares; 2,469,176 and     2,511,526 shares and outstanding | 24,692                | 25,115               
|Additional paid in capital                                                                                         | 4,701,564             | 4,782,029            
|Retained earnings                                                                                                  | 19,318,199            | 19,401,019           
|Net unrealized gains on securities available for sale                                                              | 1,129,040             | 1,185,912            
|Total Stockholders' Equity                                                                                         | 25,173,495            | 25,394,075           
|                                                                                                                   |                       |                      
|Total Liabilities and Shareholders' Equity                                                                         | $257,630,089========= | $243,077,366=========

See accompanying notes to consolidated financial statements.



|                                                     | Three Months Ended June 30,
|---------------------------------------------------- | ---------------------------
|                                                     | 2000                       
|                                                     | (Unaudited)                
|Interest income:                                     |                            
|Loans                                                | $4,024,878                 
|Investment securities                                | 604,832                    
|Other                                                | 30,059                     
|Total interest income                                | 4,659,769                  
|INTEREST EXPENSE                                     |                            
|Deposits                                             | 1,700,115                  
|Borrowed money                                       | 1,041,909                  
|Total interest expense                               | 2,742,024                  
|NET INTEREST INCOME                                  | 1,917,745                  
|PROVISION FOR LOAN LOSSES                            | 65,899                     
|NET INTEREST INCOME AFTER  PROVISION FOR LOAN LOSSES | 1,851,846                  
|NONINTEREST INCOME                                   |                            
|Service charges, fees and commissions                | 706,498                    
|Gain on sale of securities                           | ---                        
|Miscellaneous                                        | 41,661                     
|Total noninterest income                             | 748,159                    
|NONINTEREST EXPENSE                                  |                            
|Compensation & benefits                              | 1,022,554                  
|Occupancy                                            | 306,216                    
|Data processing                                      | 167,836                    
|Federal insurance premium                            | 7,943                      
|Miscellaneous                                        | 410,627                    
|Total noninterest expense                            | 1,915,176                  
|INCOME BEFORE TAXES                                  | 684,829                    
|INCOME TAXES                                         | 247,638                    
|NET INCOME                                           | $   437,191=======         
|BASIC EARNINGS PER SHARE                             | $  .18====                 
|DILUTED EARNINGS PER SHARE                           | $  .18====                 
|DIVIDENDS PER SHARE                                  | $  .08====                 

|                                                                                     | Three Months Ended June 30,
|------------------------------------------------------------------------------------ | ---------------------------
|                                                                                     | 2000                       
|                                                                                     | (Unaudited)                
|OPERATING ACTIVITIES                                                                 |                            
|Net income                                                                           | $437,191                   
|Adjustments to reconcile net income to     net cash provided by operating activities |                            
|Provision for loan losses                                                            | 65,899                     
|Depreciation                                                                         | 131,723                    
|Amortization of premium and accretion        of discount on securities, net          | (3,885)                    
|Increase in net deferred loan fees                                                   | 14,005                     
|Increase in deferred income taxes                                                    | 39,930                     
|(Increase) in other assets                                                           | (474,966)                  
|Increase in other liabilities                                                        | 92,643                     
|(Gain) on sale of loans                                                              | (196,576)                  
|Proceeds from sale of loans                                                          | 14,641,341                 
|Loans originated for resale                                                          | (16,364,172)               
|Gain on sale of available for sale        securities                                 | ---                        
|Net cash provided (absorbed) by operating         activities                         | (1,616,867)                
|INVESTING ACTIVITIES                                                                 |                            
|Proceeds from maturities of held to    maturity securities                           | ---                        
|Proceeds from sale of available for    sale securities                               | ---                        
|Purchase of investment securities                                                    | (2,786,585)                
|Net (Increase) in loans                                                              | (9,708,446)                
|Purchases of property and equipment                                                  | (48,714)                   
|Redemption (purchase) of FHLB stock                                                  | (650,000)                  
|Decrease in Real Estate Owned                                                        | 245,485                    
|Net cash provided (absorbed) by investing activities                                 | (12,948,260)               
|FINANCING ACTIVITIES                                                                 |                            
|Dividends paid                                                                       | (199,274)                  
|Net (decrease) in deposits                                                           | (328,412)                  
|Proceeds from advances and other    borrowed money                                   | 37,000,000                 
|Repayments of advances and other    borrowed money                                   | (22,000,000)               
|Repurchase common stock                                                              | (401,615)                  
|Net cash provided (absorbed by  financing activities                                 | 14,070,699                 
|(DECREASE) IN CASH AND CASH EQUIVALENTS                                              | (494,428)                  
|CASH AND CASH EQUIVALENTS-beginning of period                                        | 7,424,577                  
|CASH AND CASH EQUIVALENTS-end of period                                              | $6,930,149========         

See accompanying notes to consolidated financial statements.



NOTE 1. -- BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Rule 10-01 of regulation
S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

The accompanying consolidated financial statements include the accounts of Community Financial Corporation ("Community" or the "Company"), its wholly-owned subsidiary, Community Bank (the "Bank") and Community First Mortgage Corporation, a
wholly-owned subsidiary of the Bank ("First Mortgage").  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, 2000, are not necessarily indicative of the
results that may be expected for the year ending March 31, 2001.

NOTE 2 -- 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.
 Basic earnings per share for the three months ended June 30, 2000 and 1999 have been determined by dividing net income by the weighted average number of shares of common stock outstanding during these periods (2,489,787 and 2,572,146, respectively).  The
number of shares used to determine diluted earnings per share for the same three-month periods was 2,489,787 and 2,572,146, respectively.  Basic and diluted earnings per share are computed in the following table.

|                                         | For the Three Months Ended
|---------------------------------------- | --------------------------
|                                         | June 30, 2000             
|                                         | Income                    
|Basic EPS                                |                           
|Income available to  common stockholders | $437,191                  
|Effect of Dilutive  Securities Options   | --                        
|Diluted EPS                              |                           
|Income available to  common stockholders | $437,191                  

NOTE 3. -- STOCKHOLDERS' EQUITY

The following table presents the Bank's capital levels at June 30, 2000 relative to the requirements applicable under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"):

|                   | AmountRequired | PercentRequired | ActualAmount | ActualPercent | Excess
Amount
|------------------ | -------------- | --------------- | ------------ | ------------- | -------------
|                   |                |                 |              |               |              
|Tangible Capital   | $ 3,881,000    | 1.50%           | $23,313,000  | 9.01%         | $19,431,000  
|Core Capital       | 10,352,000     | 4.00            | 23,313,000   | 9.01          | 12,961,000   
|Risk-based Capital | 13,889,000     | 8.00            | 25,402,000   | 14.63         | 11,513,000   

Capital distributions by OTS-regulated savings banks 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 "Tier 1" savings bank to make capital distributions during a calendar year up to 100% of its net income to date plus the amount that would reduce by one-half its surplus capital ratio at the beginning of the calendar year.  Any
distributions in excess of that amount require prior OTS notice, with the opportunity for OTS to object to the distribution.  A Tier 1 savings bank is defined as a savings bank that has, on a pro forma basis after the proposed distribution, capital equal
to or greater than the OTS fully phased-in capital requirement and has not been deemed by the OTS to be "in need of more than normal supervision."  The Bank is currently classified as a Tier 1 institution for these purposes.  The Capital Distribution
regulation requires that savings banks provide the applicable OTS District Director with a 30-day advance written notice of all proposed capital distributions whether or not advance approval is required by the regulation.

Note 4. -- SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS

Total interest paid for the three months ended June 30, 2000 and 1999 was $2,661,233 and $1,865,810, respectively. Income taxes paid for the three months ended June 30, 2000 and 1999 were $226,380 and $425,971, respectively.

NOTE 5. -- COMPREHENSIVE INCOME

FASB Statement No. 130, " Reporting Comprehensive Income", effective for fiscal years beginning on or after January 1, 1998, establishes standards for reporting and displaying comprehensive income and its components. 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-months ended June
30, 2000 and 1999:

|                                                                                                                                                    | Three Months Ended June 30
|--------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                                                                                                    | 2000                      
|(Amounts in thousands)                                                                                                                              |                           
|Net income                                                                                                                                          | $  437,191                
|Other comprehensive income,  net of tax    Unrealized gains on securities:      Unrealized holding gains (losses)       
 arising during the period | (56,782)                  
|Less:  Reclassification        included in net income                                                                                               | ---                       
|                                                                                                                                                    | $ 380,409======           

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

The Company's total assets increased $14.6 million to $257.6 million at June 30, 2000, due primarily to an increase in loans receivable of $11.6 million which was funded with advances from the FHLB of Atlanta. Deposits decreased $328,000 to $158.2
million at June 30, 2000, from $158.6 million at March 31, 2000. The decrease in deposits was due primarily to a decrease in money market deposit accounts. Stockholders' equity decreased to $25.2 million at June 30, 2000, from $25.4 million at March 31,
2000, due primarily to the Company's stock repurchase of $402,000, a payment of $0.08 per share in cash dividends and a decrease in the net unrealized gain on securities available for sale which was partially offset by earnings for the three month period
ended June 30, 2000.

At June 30, 2000, non-performing assets totaled approximately $1.3 million or 50% of assets compared to $1.3 million or .52% of assets at March 31, 2000. Non-performing assets at June 30, 2000 were comprised primarily of residential real estate
acquired through foreclosure. At June 30, 2000 the largest property in non-performing assets was a multi-family unit with an approximate value of $457,000.

At June 30, 2000, our allowance for loan losses to non-performing assets was 101% and to total assets was .50%. Based on current market values of the properties securing these loans, management anticipates no significant losses in excess of the
reserves for losses previously recorded.  As of June  30, 2000, there were also $3.6 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 asset categories. These loans are comprised primarily of commercial
and residential real estate loans. Included in the commercial real estate loans of concern is one loan in the amount of $1.3 million which is current as to interest and principal payments.

We maintain an allowance for loan losses to provide for estimated potential losses in our loan portfolio.  Management determines the level of reserves based on loan performance, the value of the collateral, economic and market conditions, and previous
experience.  Management reviews the adequacy of the allowance at least quarterly, utilizing its internal loan classification system.  Management believes that the loan loss reserve is adequate at June 30, 2000.  Although management believes it uses the
best information available, future adjustments to reserves may be necessary.

LIQUIDITY

Historically, the Bank has maintained its liquid assets above the minimum requirements imposed by federal regulations and at a level believed adequate to meet requirements of normal daily activities, repayment of maturing debt and potential deposit
outflows. As of June 30,2000 the Bank's liquidity ratio (liquid assets as a percentage of net withdrawable savings and current borrowings) was 6.00%, which exceeds the current 4% regulatory requirement.

Results of OperationsThree Months Ended June 30, 2000 and 1999

---

General.  Net income for the three months ended June 30, 2000 was $437,000 compared to $511,000 for the three months ended June 30, 1999. Net interest income increased $146,000 while non-interest income decreased $302,000 during the three months ended
June 30, 2000 compared to the same period in 1999. Income before taxes decreased to $685,000 for the three months ended June 30, 2000 from $867,000 for the three months ended June 30, 1999.

Interest Income.   Total interest income increased to $4.7 million for the three months ended June 30, 2000, from $3.6 million for the three months ended June 30, 1999, due primarily to increases in both the average balance of investment securities
and loans for the three months ended June 30, 2000 as compared to the period ended June 30,1999.  The average yield earned on interest-earning assets was 7.96% for the three months ended June 30, 2000 compared to 7.83% for the three months ended June 30,
1999.

Interest Expense.  Total interest expense increased to $2.7 million for the quarter ended June 30, 2000, from $1.9 million for the quarter ended June 30, 1999. Interest on deposits increased to $1.7 million for the quarter ended June 30, 2000 from
$1.6 million for the quarter ended June 30, 1999 due primarily to an increase in average outstanding deposit balances. Interest expense on borrowed money increased to $1.0 million for the quarter ended June 30, 2000, from $286,000 for the quarter ended
June 30, 1999, due primarily to an increase in average outstanding borrowings.  The average rate paid on interest-bearing liabilities was 4.95% during the three months ended June 30, 2000 compared to 4.37% for the three months ended June 30, 1999 due to
an increase in the level of interest rates, primarily on borrowings.

Provision for Loan Losses.  The provision for loan losses decreased to $66,000 for the three months ended June 30, 2000, from $69,000 for the three months ended June 30, 1999.

Noninterest Income.  Noninterest income decreased to $748,000 for the three months ended June 30, 2000, from $1.1 million for the three months ended June 30, 1999 due primarily to gains realized on the sale of securities of $550,000 during the quarter
ended June 30, 2000 and an increase in fees and gains on the sale of mortgage loans in the secondary market by our subsidiary, Community First Mortgage Corporation during the June 30, 2000 quarter.

Noninterest Expenses.  Noninterest expense increased by $29,000 to $1.9 million for the three months ended June 30, 2000 compared to the same period last year. Data processing expense increased during the June 30. 2000 quarter compared to the June 30,
1999 quarter due to purchases of additional equipment and increased electronic processing volumes. The decrease in federal insurance premiums for the same periods is related to decreased insurance rates by the FDIC.

Taxes.  Taxes decreased to $248,000 for the three months ended June 30, 1999, from $355,000 for the three months ended June 30, 1999. The effective tax rate decreased from 41% for the June 30, 1999 quarter to 36.2% for the June 30, 2000 quarter due to
an increase in interest income from tax advantaged securities.

Disclosure Regarding Forward-Looking Statements

This document, including information incorporated by reference, contains, and future filings by Community Financial Corporation on Form 10-KSB, Form 10-QSB and Form 8-K and future oral and written statements by Community Financial Corporation and its
management may contain, forward-looking statements about the corporation and its subsidiaries 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, growth opportunities, interest rates, cost savings and funding advantages expected or anticipated to be realized by management.  Words such as "may," "could," "should,"
"would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify these forward-looking statements.  Forward-looking statements by Community Financial Corporation and its management are based on
beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions of management and are not guarantees of future performance.  Community Financial Corporation disclaims any obligation to update or revise any forward-looking
statements based on the occurrence of future events, the receipt of new information, or otherwise.  The important factors we discuss below and elsewhere in this document, as well as other factors discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in this document and identified in our filings with the SEC 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:

The following factors, many of which are subject to change based on various other factors beyond our control, could cause our financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in
such forward-looking statements:

- the strength of the United States economy in general and the strength of the local economies in which we conduct our operations;
- the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board;
- inflation, interest rate, market and monetary fluctuations;
- the timely development of and acceptance of new products and services of 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 willingness of users to substitute competitors' products and services for our products and services;
- the success of Community Bank in gaining regulatory approval of its products and services, when required;
- the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance);
- the impact of  technological changes;
- acquisitions;
- changes in consumer spending and saving habits; and
- our success at managing the risks involved in the foregoing.

PART II - OTHER INFORMATION

|Item 1. | Legal Proceedings:                                  
|------- | ----------------------------------------------------
|        | Not Applicable.                                     
|Item 2. | Changes in Securities:                              
|        | Not Applicable.                                     
|Item 3. | Defaults Upon Senior Securities:                    
|        | Not Applicable.                                     
|Item 4. | Submission of Matters to a Vote of Security Holders:
|        | Not Applicable.                                     
|Item 5. | Other Information:                                  
|        | Not Applicable.                                     
|Item 6. | Exhibits and Reports on Form 8-K:                   
|        | a.   Exhibits                                       
|        | See Exhibit Index                                   
|        | b.   Reports on Form 8-K:                           
|        | None to be reported.                                

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | **COMMUNITY FINANCIAL CORPORATION**Registrant
| | ---------------------------------------------

|Date: 	August 8, 2000 | By: | /s/ R. Jerry Giles                                              
|--------------------- | --- | ----------------------------------------------------------------
|                      |     | R. Jerry GilesChief Financial Officer*(Duly Authorized Officer)*

******EXHIBITS INDEX**

Exhibit No.                     Description

27              		                Financial Data Schedule