SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
COMMUNITY FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is
calculated and state how it was determined)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
COMMUNITY FINANCIAL CORPORATION
June 30, 1999
Dear Fellow Stockholders:
On behalf of the Board of Directors and management of Community
Financial Corporation, I cordially invite you to attend the 1999 Annual Meeting
of Stockholders. The meeting will be held at 6:30 p.m. local time, on July 28,
1999, at Community Financial's executive offices located at 38 North Central
Avenue, Staunton, Virginia.
The matters expected to be acted upon at the meeting are described in
the attached proxy statement. In addition, we will report on our progress during
the past year, and entertain your questions and comments.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting, I urge you to read the enclosed proxy statement and then
complete, sign and date the proxy card and return it in the postage-paid
envelope provided. This will save us the additional expense in soliciting
proxies and will ensure that your shares are represented at the meeting. Please
note that you may vote in person at the meeting even if you have previously
returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
Thomas W. Winfree
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
COMMUNITY FINANCIAL CORPORATION
38 North Central Avenue
Staunton, Virginia 24401
(540) 886-0796
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on July 28, 1999
Notice is hereby given that the Annual Meeting of Stockholders of
Community Financial Corporation will be held at Community Financial's executive
offices located at 38 North Central Avenue, Staunton, Virginia on July 28, 1999
at 6:30 p.m. local time.
A PROXY CARD AND A PROXY STATEMENT FOR THE MEETING ARE ENCLOSED.
The meeting is for the purpose of considering and acting upon the:
1. Election of three directors of Community Financial;
2. Ratification of the appointment of BDO Seidman as independent
accountants for Community Financial for the year ending March 31,
2000; and
such other matters as may properly come before the meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on any of the foregoing proposals at the
meeting on the date specified above, or on any date or dates to which the
meeting may be adjourned or postponed. Stockholders of record at the close of
business on May 28, 1999 are the stockholders entitled to vote at the meeting,
and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
meeting in person.
By Order of the Board of Directors
Jane C. Hickok, Corporate Secretary
Staunton, Virginia
June 30, 1999
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE COMMUNITY FINANCIAL THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
38 North Central Avenue
Staunton, Virginia 24401
(540) 886-0796
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To be held on July 28, 1999
Community Financial Corporation's Board of Directors is using this
proxy statement to solicit proxies from the holders of Community Financial
common stock for use at Community Financial's annual meeting of stockholders. We
are first mailing the Notice of Annual Meeting and this proxy statement on or
about June 30, 1999.
Certain of the information provided herein relates to Community Bank, a
wholly owned subsidiary of Community Financial.
TIME AND PLACE OF THE ANNUAL MEETING; MATTERS TO BE CONSIDERED
TIME AND PLACE OF THE ANNUAL MEETING. Our annual meeting will be held
as follows
DATE: July 28, 1999
TIME: 6:30 p.m., local time
PLACE: 38 North Central Avenue
Staunton, Virginia
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING. At the meeting,
stockholders of Community Financial are being asked to consider and vote upon
the following:
. the election of three directors of Community Financial;
. the ratification of the appointment of BDO Seidman as Community
Financial's independent accountants for the fiscal year ending
March 31, 2000; and
any other matters that may properly come before the Community Financial annual
meeting. As of the date of this proxy statement, we are not aware of any other
business to be presented for consideration at the annual meeting other than the
matters described in this proxy statement.
VOTING RIGHTS OF STOCKHOLDERS; VOTES REQUIRED FOR APPROVAL
VOTING RIGHTS OF STOCKHOLDERS. We have fixed the close of business on
May 28, 1999 as the record date for stockholders entitled to notice of and to
vote at the Community Financial annual meeting. Only holders of record of
Community Financial common stock on that record date are entitled to notice of
and to vote at the annual meeting. You are entitled to one vote for each share
<PAGE>
of Community Financial common stock you own. On May 28, 1999, 2,572,146 shares
of Community Financial common stock were outstanding and entitled to vote at the
annual meeting.
VOTES REQUIRED FOR APPROVAL. Directors are elected by a plurality of
the votes cast, in person or by proxy, at the annual meeting by holders of
Community Financial common stock. This means that the director nominees with the
most affirmative votes are elected to fill the available seats. Shares that are
represented by proxy which are marked "vote withheld" for the election of one or
more director nominees will have no effect on the vote on the election of
directors.
Ratification of the appointment of BDO Seidman as our independent
auditors for the year ending March 31, 2000 requires the affirmative vote of the
majority of shares cast, in person or by proxy, at the annual meeting by holders
of Community Financial common stock. In cases where a shareholder abstains from
voting on the proposal to ratify the appointment of BDO Seidman as our
independent auditors, those shares will not be included in the vote total and,
therefore, will have no effect on the outcome of the vote.
Under certain circumstances, brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned proxies to
the brokers (so-called "broker non-votes"). In such cases, those shares will not
be included in the vote totals with respect to those particular matters and,
therefore, will have no effect on the outcome of the vote. However, under The
Nasdaq Stock Market rules, if your broker holds you shares in its name, your
broker is permitted to vote your shares on both matters to be considered at the
annual meeting even if it does not receive voting instructions from you.
VOTING OF PROXIES; REVOCABILITY OF PROXIES; PROXY SOLICITATION COSTS
VOTING OF PROXIES. Proxies are solicited to provide all stockholders of
record on the voting record date an opportunity to vote on matters scheduled for
the annual meeting and described in these materials. Shares of common stock can
only be voted if the stockholder is present in person at the annual meeting or
by proxy. To ensure your representation at the annual meeting, we recommend you
vote by proxy even if you plan to attend the annual meeting. You can always
change your vote at the meeting.
Voting instructions are included on your proxy card. Shares of common
stock represented by properly executed proxies will be voted by the individuals
named in such proxy in accordance with the stockholder's instructions. Where
properly executed proxies are returned to Community Financial with no specific
instruction as how to vote at the annual meeting, the persons named in the proxy
will vote the shares "FOR" the election of management's director nominees and
"FOR" ratification of the appointment of BDO Seidman as our independent auditors
for the year ending March 31, 2000. Should any other matters be properly
presented at the annual meeting for action, the persons named in the enclosed
proxy and acting thereunder will have the discretion to vote on these matters in
accordance with their best judgment.
You may receive more than one proxy card depending on how your shares
are held. For example, you may hold some of your shares individually, some
jointly with your spouse and some in trust for your children -- in which case
you will receive three separate proxy cards to vote.
2
<PAGE>
REVOCABILITY OF PROXIES. You may revoke your proxy before it is voted
by:
. submitting a new proxy with a later date,
. notifying your company's secretary in writing before the
annual meeting that you have revoked your proxy, or
. voting in person at the annual meeting.
If you plan to attend the annual meeting and wish to vote in person, we
will give you a ballot at the annual meeting. However, if your shares are held
in the name of your broker, bank or other nominee, you must bring an account
statement or letter from the nominee indicating that you were the beneficial
owner of Community Financial common stock on May 28, 1999, the record date for
voting at the Community Financial annual meeting.
PROXY SOLICITATION COSTS. We will pay the cost of soliciting proxies.
In addition to this mailing, our directors, officers and employees may also
solicit proxies personally, electronically or by telephone. We will also
reimburse brokers and other nominees for their expenses in sending these
materials to you and obtaining your voting instructions.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On May 28, 1999, the voting record date for the annual meeting, our
directors, director nominees and executive officers as a group (14 persons)
beneficially owned 538,048 sharers, or 19.80% of Community Financial common
stock. This amount includes shares held directly, as well as 146,000 shares
which are subject to presently exercisable options and options exercisable
within 60 days of the voting record date, held in retirement accounts, held by
certain of the group members' families, corporations for which a group member is
an officer or director, or held by trusts of which a group member is a trustee
or a substantial beneficiary with respect to which shares the group member may
be deemed to have sole or shared voting and/or investment power. As of the
voting record date, management was not aware of any persons or entities who
beneficially owned more than five percent of Community Financial's outstanding
common stock.
PROPOSAL I - ELECTION OF DIRECTORS
Our Board of Directors consists of seven members. Approximately
one-third of the directors are elected annually to serve for a three-year period
or until their respective successors are elected and qualified. All of our
nominees currently serve as Community Financial directors.
The table below sets forth information regarding our Board of
Directors, including their age, position on the board, term of office and
beneficial share ownership of Community Financial common stock. If any director
nominee is unable to serve before the election, your proxy authorizes us to vote
for a replacement nominee if the Board of Directors names one. At this time, we
are not aware of any reason why a nominee might be unable to serve if elected.
Except as disclosed in this proxy statement, there are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected. THE BOARD RECOMMENDS YOU VOTE "FOR" EACH OF THE DIRECTOR
NOMINEES.
3
<PAGE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially Percent
Director Term to Owned at of
Name Age Positions Held Since(1) Expire May 28, 1999(2) Class
- ----------------------------------------------------------------------------------------------------------------
DIRECTOR NOMINEES
<S> <C> <C> <C> <C> <C> <C>
Charles F. Andersen, MD 57 Director 1990 2002 45,740 1.77%
Charles W. Fairchilds 51 Director 1996 2002 9,110(3) .35%
Thomas W. Winfree 54 President, Chief Executive 1995 2002 78,666(4) 3.01%
Officer and Director
DIRECTORS CONTINUING IN OFFICE
James R. Cooke, Jr., DDS 61 Chairman of the Board 1984 2000 94,200(5) 3.65%
Kenneth L. Elmore 63 Director 1988 2000 52,700 2.04%
Jane C. Hickok 62 Vice Chairman of the Board 1983 2001 91,441(6) 3.54%
and Secretary
Dale C. Smith 60 Director 1980 2001 43,500(7) 1.69%
</TABLE>
- ----------------------------
(1) Includes service as a director of Community Bank.
(2) The nature of beneficial ownership for shares reported in this column is
sole voting and investment power, except as otherwise set forth in these
footnotes. Included in the shares beneficially owned by the named
individuals are options, either currently exercisable or exercisable
within 60 days of the voting record date, to purchase shares of
Community Financial common stock as follows: Mr. Anderson - 8,000
shares; Mr. Fairchilds - 8,000 shares; Mr. Winfree -39,000 shares; Mr.
Cooke - 8,000 shares; Mr. Elmore -8,000 shares; Mrs. Hickok - 8,000
shares and Mr. Smith - 7,000 shares.
(3) Includes 200 shares in which Mr. Fairchilds has reported shared ownership.
(4) Includes 500 shares in which Mr. Winfree has reported shared ownership.
(5) Includes 60,500 shares in which Mr. Cooke has reported shared ownership.
(6) Includes 56,628 shares in which Mrs. Hickok has reported shared ownership.
(7) Includes 12,252 shares in which Mr. Smith has reported shared ownership.
The business experience during the last five years of each of the
directors is as follows:
CHARLES F. ANDERSEN, M.D. Dr. Andersen is an orthopedic surgeon in
private practice in Waynesboro, Virginia.
CHARLES W. FAIRCHILDS. Mr. Fairchilds has been the President of Allied
Ready Mix Co., a concrete company located in Waynesboro, Virginia since 1987.
4
<PAGE>
THOMAS W. WINFREE. Mr. Winfree is President and Chief Executive Officer
of Community Financial and Community Bank, positions he has held since October
1995. From 1984 to 1995, he was President and Chief Executive Officer of
Jefferson Savings and Loan Association in Warrenton, Virginia.
JAMES R. COOKE, JR., D.D.S. Dr. Cooke has been a practicing dentist in
Staunton, Virginia since 1965.
KENNETH L. ELMORE. Mr. Elmore has been partner of Elmore, Hupp & Co., a
certified public accounting firm, since 1991. Mr. Elmore has been a certified
public accountant for over 30 years.
JANE C. HICKOK. Mrs. Hickok was elected Vice Chairman of the Board in
October 1994 and Secretary of Community Financial in October 1998. She had
previously retired as President and Chief Executive Officer of Community Bank in
October 1994 after serving since 1984. Mrs. Hickok had also retired as President
and Chief Executive Officer of Community Financial in January 1995, but
continues to serve as a director of Community Financial and Community Bank. Mrs.
Hickok was elected as a director of Community Bank in 1983 and as a director of
Community Financial in 1990 when it became the holding company of Community
Bank.
DALE C. SMITH. Mr. Smith is the General Manager and Chief Executive
Officer of Augusta Cooperative Farm Bureau, a farm supply and retail store.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES; DIRECTOR COMPENSATION
MEETINGS OF COMMUNITY FINANCIAL. The Community Financial Board met 14
times during fiscal 1999. All of the directors attended at least 75% of the
Board meetings and meetings of the committees on which they served during the
period they were directors.
The principal standing committees of the Community Financial board are
the Executive and Long-Range Planning Committee and the Stock Option Committee.
The entire Community Financial board, of which five of the seven directors are
non-employee directors, serves as the Audit and Nominating Committees. Community
Financial has not paid any compensation to its officers since its formation and
does not presently anticipate paying any compensation to such persons until it
becomes actively involved in the operation or acquisition of businesses other
than Community Bank and its subsidiaries. Accordingly, all compensation matters
are addressed by the Community Bank board as discussed below.
The Executive and Long-Range Planning Committee is responsible for
formulating future plans and discussing objectives and corporate goals of
Community Financial. Directors Andersen, Cooke, Elmore, Fairchilds and Hickok
currently serve on this committee. This committee did not meet during fiscal
1999.
The Stock Option Committee is responsible for administering Community
Financial's stock based incentive plan. Directors Cooke, Elmore and Smith serve
on this committee which met once during fiscal 1999.
5
<PAGE>
MEETINGS OF COMMUNITY BANK. The Community Bank board met 12 times
during fiscal 1999. All of the directors attended at least 75% of the board
meetings and meetings of the committees on which they served during the period
they were directors.
The principal standing committees of the Community Bank board are the
Compensation and Benefits Committee, Executive and Long-Range Planning Committee
and Loan Committee. The entire Community Bank board serves as the Audit and
Nominating Committees.
The Compensation and Benefits Committee is responsible for determining
compensation and benefits for all officers of Community Bank. Directors Winfree,
Cooke, Hickok, Fairchilds and Smith currently serve on this committee. The
Compensation and Benefits Committee met three times during fiscal 1999.
The Long-Range Planning Committee was formed in 1986 for the purpose of
formulating future plans for physical plant needs, branching possibilities,
funding and liquidity levels and discussions of objectives and corporate goals.
Directors Andersen, Cooke, Elmore, Hickok and Winfree currently serve on this
committee. This committee did not meet during fiscal 1999.
Community Bank's Loan Committee, composed of the Chairman of the Board
of Directors, the President, the Loan Department Manager of Community Bank and
the Chief Financial Officer, meets as needed to approve mortgage loans in excess
of $250,000 and consumer loan applications in excess of $75,000. This committee
met six times during fiscal 1999.
DIRECTOR COMPENSATION. The members of the boards of directors of
Community Financial and Community Bank are identical. Directors are not paid for
service on the Board of Directors of Community Financial. We may, if we believe
it is necessary to attract qualified directors or it is otherwise beneficial to
Community Financial, adopt a policy of paying directors' for service on the
Community Financial board.
Community Bank employees receive no extra pay for service as directors.
Non-employee directors of Community Bank, other than the Chairman of the Board,
receive a base fee of $750 per month and $100 per committee meeting attended.
The Chairman of the Board receives a base fee of $1,500 per month. The Chairman
of the Board is not paid extra for attending committee meetings.
6
<PAGE>
EXECUTIVE COMPENSATION
The following tables show the compensation paid to the Chief Executive
Officer of Community Financial and Community Bank.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation(1) Compensation
- ---------------------------------------------------------------------------- ------------
Securities
Underlying All Other
Fiscal Salary Bonus Options Compensation
Name and Principal Position Year ($) ($) (#) ($)
- ------------------------------------ ------ --------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C>
THOMAS W. WINFREE 1999 $130,000 $7,800 6,000 $4,214(2)
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND DIRECTOR OF THE COMMUNITY 1998 115,500 12,000 8,000 3,368
FINANCIAL AND COMMUNITY BANK
1997 105,000 19,500 12,000 2,217
</TABLE>
- -----------------------------
(1) The executive did not receive any additional benefits or perquisites
which, in the aggregate, exceeded the lesser of 10% of his salary and
bonus, or $50,000.
(2) Represents payments on behalf of the executive, as follows: $4,022 to
Community Financial's 401(k) Plan and $192 in premiums for a term life
insurance policy.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- --------------------------------------------------------------------------------------------------
Number of
Securities % of Total Exercise
Underlying Options Granted or Base
Options to Employees Price Expiration
Name Granted (#)(1) in Fiscal Year ($/Sh) Date
- ----------------------------- -------------- --------------- -------- ----------
<S> <C> <C> <C> <C>
Thomas W. Winfree 6,000 7.55% $10.75 03/23/09
</TABLE>
- -----------------------------
(1) The exercise price of the option is the market price of Community
Financial common stock on the date of grant. The option granted becomes
exercisable, subject to the continuous employment of the executive, as
follows: 3,000 options on January 1, 2000 and 3,000 options on January
1, 2001. The option becomes exercisable immediately upon the
executive's death or upon a change in control of Community Financial.
We did not grant any stock appreciation rights last year.
7
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Unexercised In-the-money Options
Options At Fy-end (#) At Fy-end ($)(1)
Shares Value ----------------------------- ----------------------------
Acquired On Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Winfree --- $--- 39,000 10,000 $36,750 $---
</TABLE>
- -------------------
(1) The difference between the option exercise price and the market value
of Community Financial common stock at year end. The actual gain, if
any, the executive realizes will depend on the market price of
Community Financial common stock at the time of exercise.
"In-the-money" means the market price of the Community Financial common
stock is greater than the exercise price of the option on the date
specified. At March 31, 1999, 23,000 of the 49,000 options reported
were "in-the-money." We have not granted any stock appreciation rights
to date.
EMPLOYMENT AGREEMENT
Community Bank entered into an employment agreement with President
Winfree effective April 1, 1997 for a minimum annual base salary of $115,500 and
an initial term of three years. The agreement provides for one year extensions,
in addition to the then-remaining term under the agreement, on each anniversary
of the effective date of the contract, subject to a review of Mr. Winfree's
performance by the Board of Directors of Community Bank. Mr. Winfree's salary
may be increased, but not decreased, at the sole and absolute discretion of
Community Bank's Board of Directors. The agreement further provides for
termination upon Mr. Winfree's death, for cause or in certain events specified
by Office of Thrift Supervision regulations.
Under the terms of the employment agreement, if Mr. Winfree's
employment with Community Bank is terminated for any reason following a "change
in control" (as defined in the agreement), other than for cause, then Community
Bank will pay to Mr. Winfree, in addition to all other payments and benefits to
which he is entitled under any other contract, an amount equal to 299% of his
salary and bonus received during the 12 months ending with the termination of
his employment. Accordingly, if Mr. Winfree was terminated as of March 31, 1999,
he would have been entitled to receive approximately $413,400 pursuant to this
provision.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In January 1998, we established a supplemental executive retirement
plan. The supplemental executive retirement plan is a non-qualified salary
continuation program designed to provide plan participants additional retirement
income for a 20 year period commencing upon normal retirement. In the event of
death, the additional retirement income shall be payable to the participants
beneficiary. Participation in the supplemental executive retirement plan is
determined at the discretion of our compensation committee; however, only those
officers of Community Bank who have the rank of vice-president or above are
eligible to participate in the plan. Mr. Winfree is currently the only
participant. Retirement benefits payable under the supplemental executive
retirement plan are subject to offset against projected retirement benefits
payable to the participant under the Community Bank 401(k) retirement plan.
However, the minimum annual benefit payable to Mr. Winfree under the
supplemental executive retirement plan is $12,000 per year. As of March 31,
8
<PAGE>
1999, the annual benefit that would be paid under the plan to Mr. Winfree upon
reaching age 65 would be approximately $12,204. Under this arrangement,
Community Bank is the beneficiary of a life insurance policy on Mr. Winfree's
life and, based on actuarial assumptions, the life insurance proceeds receivable
by Community Bank will defray the costs associated with the program. The
insurance premium paid by Community Bank for the policy totaled $29,112 in
fiscal 1999, with an additional four premium payments remaining to be paid to
fully fund the policy.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
At the annual meeting, you will be asked to vote on the ratification of
the appointment of BDO Seidman as Community Financial's independent accountants
for the fiscal year ending March 31, 2000. We have renewed our arrangement for
BDO Seidman to be our independent accountants, subject to ratification by our
stockholders.
Representatives of BDO Seidman are expected to attend the meeting to
respond to appropriate questions and to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF BDO SEIDMAN AS COMMUNITY FINANCIAL'S INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
CERTAIN TRANSACTIONS
Community Bank has followed a policy of granting loans to officers and
directors. Loans to directors and executive officers are made in the ordinary
course of business and on the same terms and conditions as those of comparable
transactions with the general public prevailing at the time, in accordance with
our underwriting guidelines, and do not involve more than the normal risk of
collection or present other unfavorable features. All loans made by Community
Bank to its directors and executive officers are subject to the Office of Thrift
Supervision regulations restricting loan and other transactions with affiliated
persons of Community Bank. All loans to directors and executive officers were
performing in accordance with their terms at March 31, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who own more than 10% of Community Financial's common
stock, to file with the SEC initial reports of ownership and reports of changes
in ownership of common stock of Community Financial. Our officers, directors and
greater than 10% stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us and written representations that no other reports were
required, all Section 16(a) filing requirements applicable to our officers,
directors and greater than 10 percent stockholders were complied with, except
for John D. Meade III, an officer of Community Financial, who inadvertently
failed to file a Form 4 to report the purchase of 500 shares and 1,000 shares of
common stock on October 8, 1998 and November 7, 1998, respectively. On May 13,
1999, Mr. Meade filed a Form 5 disclosing the transactions.
9
<PAGE>
STOCKHOLDER PROPOSALS FOR THE 2000 PROXY STATEMENT
In order to be eligible for inclusion in next year's proxy materials
for the annual meeting of stockholders, any stockholder proposal to take action
at such meeting must be received at our main office located at 38 North Central
Avenue, Staunton, Virginia 24401, on or before March 2, 2000. To be considered
for presentation at next year's annual meeting, although not included in the
proxy statement, any stockholder proposal must be received at our main office
not less than 20 days prior to the meeting; provided, however, if less than 30
days notice of the date of next year's annual meeting is given to stockholders,
the stockholder proposal must be received on or before the close of business on
the 10th day following the day on which the notice of the date of the annual
meeting was mailed.
All stockholder proposals for inclusion in Community Financial's proxy
materials may be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act 1934 and, as with any stockholder proposal,
regardless of whether included in our proxy materials, Community Financial's
certificate of incorporation and bylaws and Virginia law.
OTHER MATTERS
We are not aware of any business to come before the annual meeting
other than those matters described in this proxy statement. However, if any
other matter should properly come before the meeting, it is intended that
holders of the proxies will act in accordance with their best judgment.
10
<PAGE>
REVOCABLE PROXY
COMMUNITY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
To be held on July 28, 1999
The undersigned hereby appoints the members of the Board of Directors
of Community Financial Corporation, and its survivor, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of Community Financial which the undersigned is entitled
to vote at the annual meeting of stockholders, to be held on Wednesday, July 28,
1999, at 6:30 p.m. local time, and at any and all adjournments thereof, as
follows:
I. The election as directors of all nominees listed below for three-year
terms to expire in the year 2002 (except as marked to the contrary).
VOTE FOR ALL
FOR WITHHELD EXCEPT
--- -------- ------
[ ] [ ] [ ]
INSTRUCTIONS: TO VOTE FOR ALL NOMINEES MARK THE BOX "FOR" WITH AN "X".
TO WITHHOLD YOUR VOTE FOR ALL NOMINEES MARK THE BOX "WITHHOLD" WITH AND
"X". TO WITHHOLD YOUR VOTE FOR AN INDIVIDUAL NOMINEE MARK THE BOX "FOR
ALL EXCEPT" WITH AN "X" AND STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW FOR WHOM YOU WISH YOUR VOTE WITHHELD.
CHARLES F. ANDERSEN, MD CHARLES W. FAIRCHILDS
THOMAS W. WINFREE
II. Ratification of the appointment of BDO Seidman as Community
Financial's auditors for the year ending March 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the annual meeting or any adjournment
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED "FOR" THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
IMPORTANT! PLEASE SIGN AND DATE ON REVERSE SIDE.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy may be revoked at any time before it is voted by: (i) filing
with the Secretary of Community Financial at or before the annual meeting a
written notice of revocation bearing a later date than the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of Community Financial at or before the annual meeting; or (iii)
attending the annual meeting and voting in person. Attendance at the annual
meeting will not in and of itself constitute revocation of a proxy. If this
proxy is properly revoked as described above, then the power of such attorneys
and proxies shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from Community Financial, prior to
the execution of this proxy, of the Notice of the Annual Meeting, a Proxy
Statement dated June 30, 1999 and an Annual Report to Stockholders.
Dated: _________________________, 1999
---------------------------------------
SIGNATURE OF STOCKHOLDER
-------------------------------------
SIGNATURE OF STOCKHOLDER
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE ON THIS CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.
- --------------------------------------------------------------------------------
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------
