Community Financial Reports Three and Nine Month Earnings

• Press Release
• Source: Community Financial Corporation
• On 12:04 pm EST, Tuesday February 10, 2009

STAUNTON, Va., Feb. 10, 2009 (GLOBE NEWSWIRE) -- Community Financial Corporation (NasdaqCM:CFFC - News), a holding company whose sole subsidiary is Community Bank, Staunton, Virginia, today reported earnings for the quarter and nine months ended December 31, 2008. For the quarter ended December 31, 2008, Community Financial reported income of $4,239,000 or $0.97 per diluted share, compared to net income of $924,000 or $0.21 per diluted share for the same period last year. Net income for the current quarter compared to the December 31, 2007 quarter increased due to the $4.2 million tax benefit on an other than temporary impairment (OTTI) non-cash charge related to Fannie Mae and Freddie Mac preferred stock reported in the September 30, 2008 quarter and an increase in net interest income of $386,000. The increase for the current quarter was partially offset by increases in the provision for loan losses of $791,000, noninterest expenses of $418,000 and an OTTI non-cash charge related to Fannie Mae and Freddie Mac preferred stock of $482,000. The increase in the provision for loan losses is primarily related to both the increase in our lending and an increase in charge-offs and anticipated charge-offs related to loans for which we have established specific reserves. The tax benefit of $4.2 million related to the OTTI charge in the September 30, 2008 quarter and the after tax OTTI charge of $299,000 during the current quarter increased the net income reported for the current quarter by $3.9 million or $0.89 per share. Stockholders' equity increased $8.3 million to $47.0 million at December 31, 2008, from $38.7 million at March 31, 2008, due to the previously reported issuance of $12.6 million of preferred stock under the TARP program, a reduction in unrealized losses on securities available for sale and earnings for the nine month period ended December 31, 2008 offset by two cash dividend payments.

Related Quotes

Symbol	Price	Change
CFFC	4.10	-0.10

{"s" : "cffc","k" : "c10,l10,p20,t10","o" : "","j" : ""}

Total interest income decreased during the December 31, 2008 quarter compared to the December 31, 2007 quarter as a result of the decrease in yield on interest earning assets and the elimination of the dividend on the Fannie Mae and Freddie Mac preferred and the reduction in the dividend on our Federal Home Loan Bank Stock partially offset by an increase in the volume of interest earning assets. Total interest expense decreased by $1,420,000 for the third quarter of 2008 compared to the same period in 2007 as a result of the decrease in the interest rates paid on interest-bearing liabilities offset by the increase in the volume of interest-bearing liabilities. The interest rate spread increased by 47 basis points to 3.41% for the quarter ended December 31, 2008 compared to 2.94% for the same period in 2007.

Non-interest income decreased by $502,000 for the quarter ended December 31, 2008 from $917,000 for the December 31, 2007 quarter due to the OTTI charge of $482,000 previously mentioned. Non-interest expenses increased $418,000 to $3,526,000 for the December 31, 2008 quarter from $3,109,000 million for the December 31, 2007 quarter. The increase in non-interest expenses was due primarily to compensation related expenses due generally to merit increases, additional loan and retail personnel and federal deposit insurance premiums.

Community's net income (loss) for the nine months ended December 31, 2008 was $(5,286,000) or $(1.21) diluted loss per share, compared to $2,830,000 or $0.64 diluted earnings per share for the nine months ended December 31, 2007. The decrease in net income for the nine months ended December 31, 2008 compared to the same period ended December 31, 2007 is attributable to the OTTI charges, an increase in noninterest expenses and the increased provision for loan losses offset by an increase in net interest income. The increase in net interest income is attributable to an increase in the average outstanding balance of loans receivable and an increase in the interest rate spread for the nine months ended December 31, 2008 compared to December 31, 2007. The interest rate spread increased by 24 basis points to 3.30% for the nine months December 31, 2008 compared to 3.06% for the same period in 2007.

At December 31, 2008, Community Bank was classified as an ``well capitalized'' institution. Community Bank, the wholly owned subsidiary of Community Financial, is headquartered in Staunton, Virginia and has offices in Waynesboro, Stuarts Draft, Raphine, Verona, Lexington and Virginia Beach. Community Financial Corporation is traded on the Nasdaq National Market, under the symbol CFFC.

Except for the historical information in this press release, the matters discussed may be deemed to be forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties, including, but not limited to, changes in economic conditions in the Company's market areas, changes in the financial condition or business prospects of the Company's borrowers, changes in policies by regulatory agencies, the impact of competitive loan products, loan demand risks, fluctuations in interest rates and the relationship between long and short term rates, operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. Actual strategies and results in future periods may differ materially from those currently expected. These forward-looking statements represent the company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update these forward-looking statements.

                Community Financial Corporation (NasdaqCM:CFFC - News)


 Selected Financial Condition Data
 ---------------------------------
 (Dollars in thousands)                                              
                                                            Percent
                                 December 31,  March 31,    Increase 
                                    2008         2008      (Decrease)
                                 ------------  ---------   ----------

 Total assets                     $507,923    $491,246         3.4%
 Loans receivable, net             468,808     437,174         7.2
 Investment securities               2,457      12,503       (80.3)
 Real estate owned and                                    
  repossessed assets                 1,448         593       144.2
 Deposits                          357,403     350,731         1.9
 Borrowings                        101,829      98,834         3.0
 Stockholders' equity               46,977      38,705        21.4
                                                        

 Selected Operations Data
 ------------------------
 (Dollars in thousands)             Three Months Ended       Percent
                                 December 31, December 31,  Increase
                                     2008        2007      (Decrease)
                                 ------------ -----------  ----------
                                                           
 Interest income                    $7,053      $8,087       (12.8) %
 Interest expense                    3,012       4,432       (32.0)
  Net interest income                4,041       3,655        10.6
 Provision for loan losses             894         103       768.0
  Net interest income after                               
   provision for loan losses         3,147       3,553       (11.4)
 Noninterest income                    415         917       (54.7)
 Noninterest expense                 3,526       3,109        13.4
 Income taxes (benefit) expense     (4,203)        437    (1,061.8)
 Net income                          4,239         924       358.8
 Effective dividend on preferred                          
  stock                                  4          --       100.0
 Net income available to common                           
  stockholders                       4,235         924       358.3
                                                          


                                At or for the Quarter Ended  Percent
                                 December 31, December 31,  Increase
                                     2008        2007      (Decrease)
                                 ------------ -----------  ----------
 
 Return on average equity            49.95%       9.33%      435.4 %
 Return on average assets             3.39         .76       346.1
 Interest rate spread                 3.41        2.94        16.0
 Diluted earnings (loss) per share    0.97         .21       361.9
 Dividends paid on common shares       .00        .065          --


                                     Nine Months Ended       Percent
                                 December 31, December 31,  Increase
                                     2008        2007      (Decrease)
                                 ------------ -----------  ----------
 (Dollars in thousands)
 Interest income                   $21,875     $24,329       (10.1)
 Interest expense                    9,794      13,026       (24.8)
  Net interest income               12,081      11,303         6.9
 Provision for loan losses           1,646         455       261.8
  Net interest income after 
   provision for loan losses        10,435      10,848        (3.8)
 Noninterest income (loss)          (8,950)      2,602      (444.0)
 Noninterest expense                10,203       9,266        10.1
 Income taxes (benefit) 
  expense                           (3,432)      1,354      (353.5)
 Net income (loss)                  (5,286)      2,830      (286.8)
 Effective dividend on 
  preferred stock                        4         ---       100.0
 Net income (loss) available 
  to common stockholders            (5,282)      2,830      (286.6)


 Other Selected Data                   At or for the
 -------------------                 Nine Months Ended       Percent
                                 December 31, December 31,  Increase
                                     2008        2007      (Decrease)
                                 ------------ -----------  ----------

 Return (loss) on average 
  equity                            (18.81)%      9.57%     (296.6) %
 Return (loss) on average 
  assets                             (1.43)        .79      (281.0)
 Interest rate spread                 3.30        3.06         7.8
 Non-performing assets 
  to total assets                     0.96         .33       190.9


 Per share data                       At or for the
 --------------                     Nine Months Ended       Percent
                                 December 31, December 31,  Increase
                                     2008        2007      (Decrease)
                                 ------------ -----------  ----------

 Diluted earnings (loss) 
  per share                      $   (1.21)  $    0.64      (283.3)
 Book value                           7.87        8.85       (11.1)
 Dividends paid on 
  common shares                        .13        .195       (33.3)
 Shares outstanding              4,361,658   4,310,958         1.2

 Note: All share and per share data is restated for a 2-for-1 stock 
 split as of September 6, 2007.

          Community Financial Corporation
          R. Jerry Giles, Senior Vice President/
           Chief Financial Officer
          540-886-0796