UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-18261
COMMUNITY FINANCIAL CORPORATION
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
VIRGINIA 54-1532044
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38 North Central Ave., Staunton, Va. 24401
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(Address of principal executive offices zip code)
(540) 886-0796
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(Issuer's telephone number, including area code)
Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Number of shares of Common Stock, par value $.01 per share, outstanding at the
close of business on February 9, 2000,: 2,527,226.
Transitional Small Business Disclosure Format (Check one)
Yes No X
<PAGE>
COMMUNITY FINANCIAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Financial
Condition at December 31, 1999 (unaudited)
and March 31, 1999.............................................1
Consolidated Statements of Income for the Three and
Nine Months Ended December 31, 1999 and 1998 (unaudited)...... 2
Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 1999 and 1998 (unaudited)........... 3
Notes to Unaudited Interim Consolidated
Financial Statements.......................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 8
PART II. OTHER INFORMATION............................................. 13
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, March 31,
1999 1999
------------ -------------
(Unaudited)
ASSETS
Cash (including interest bearing
deposits of approximately
$2,405,000 and $1,367,000) $ 9,297,680 $ 10,131,157
Securities
Held to maturity 26,847,223 5,561,314
Available for sale 6,805,366 3,543,092
Investment in Federal Home Loan
Bank stock, at cost 2,000,000 1,508,200
Loans receivable, net 183,256,984 171,413,721
Real estate owned 1,091,599 351,733
Property and equipment, net 6,651,566 6,050,785
Accrued interest receivable
Loans 1,220,787 1,056,833
Investments 593,818 107,912
Prepaid expenses and other assets 910,743 1,085,272
Total Assets $238,675,766 $200,810,019
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $151,798,726 $153,015,076
Borrowings 59,000,000 19,000,000
Advance payments by borrowers for
taxes and insurance 113,464 190,421
Other liabilities 1,714,441 2,220,794
Total Liabilities 212,626,631 174,426,291
Stockholders' Equity
Preferred stock $.01 par value,
authorized 3,000,000 shares,
none outstanding
Common stock, $.01 par value,
authorized 10,000,000 shares,
2,560,926 and 2,572,146 shares
outstanding 25,609 25,721
Additional paid in capital 4,875,889 4,897,207
Retained earnings 19,997,876 19,395,509
Net unrealized gain on securities
available for sale 1,149,761 2,065,291
Total Stockholders' Equity 26,049,135 26,383,728
Total Liabilities and
Shareholders Equity $238,675,766 $200,810,019
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31 December 31
----------------------- -------------------------
1999 1998 1999 1998
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 3,812,512 $ 3,388,985 $10,908,835 $10,252,194
Investment securities 592,399 98,495 899,444 248,584
Other 27,768 86,831 112,992 187,847
Total interest income 4,432,679 3,574,311 11,921,271 10,688,625
INTEREST EXPENSE
Deposits 1,604,337 1,669,592 4,737,588 $ 4,821,221
Borrowed money 806,555 229,918 1,512,295 736,636
Total interest expense 2,410,892 1,899,510 6,249,883 5,557,857
NET INTEREST INCOME 2,021,787 1,674,801 5,671,388 5,130,768
PROVISION FOR LOAN LOSSES 122,408 36,000 301,562 135,999
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,899,379 1,638,801 5,369,826 4,994,769
NONINTEREST INCOME
Service charges, fees
and commissions 893,061 388,192 2,079,395 1,010,059
Gain on sale of securities 0 639,581 601,412 808,516
Miscellaneous 42,056 1,805 209,142 3,272
Total noninterest income 935,117 1,029,578 2,889,949 1,821,847
NONINTEREST EXPENSE
Compensation & benefits 1,085,324 1,016,665 3,239,208 2,396,537
Occupancy 325,744 164,913 883,183 507,574
Data processing 146,771 128,948 382,900 355,960
Federal insurance premium 21,489 19,638 64,587 60,747
Miscellaneous 639,318 304,792 1,526,032 915,316
Total noninterest expense 2,218,646 1,634,956 6,095,910 4,236,134
INCOME BEFORE TAXES 615,850 1,033,423 2,163,865 2,580,482
INCOME TAXES 185,477 420,290 852,711 1,087,846
NET INCOME $ 430,373 $ 613,133 $ 1,311,154 $ 1,492,636
BASIC EARNINGS PER SHARE $ 0.17 $ 0.24 $ 0.51 $ 0.58
DILUTED EARNINGS PER SHARE $ 0.17 $ 0.24 $ 0.51 $ 0.58
DIVIDENDS PER SHARE $ 0.08 $ 0.08 $ 0.24 $ 0.23
</TABLE>
See accompanying notes to consolidated financial statement.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
December 31,
---------------------------
1999 1998
----------- -----------
(Unaudited)
OPERATING ACTIVITIES
Net income $1,311,154 $1,492,636
Adjustments to reconcile net income to
net cash provided by operating activities
Provision for loan losses 301,562 135,999
Depreciation 463,394 191,385
Amortization of premium and accretion
of discount on securities, net 2,384 (153)
(Decrease) in net deferred loan fees (35,794) (20,859)
Increase in deferred income taxes 99,298 4,031
(Increase) in other assets (475,331) (742,182)
Increase in other liabilities 29,936 345,420
(Gain)loss on sale of loans (883,977) (145,496)
Proceeds from sale of loans 64,989,208 23,121,012
Loans originated for resale (64,990,651) (23,856,772)
Gain on sale of available for sale
securities (601,412) (808,516)
Net cash provided(absorbed)by 209,771 (283,495)
operating activities
INVESTING ACTIVITIES
Proceeds from maturities of held to
maturity securities 5,500,000 1,200,000
Proceeds from sale of available for
sale securities 612,189 821,698
Purchases of investment securities (31,668,378) (2,421,437)
Net decrease (increase) in loans (11,070,452) 1,806,154
Purchases of property and equipment (1,238,375) (2,469,928)
Redemption (purchase) of FHLB stock (491,800) ---
Increase in Real Estate Owned (739,866) ---
Net cash (absorbed) by
investing activities (39,096,682) (1,063,513)
FINANCING ACTIVITIES
Dividends paid (617,315) (590,638)
Net increase (decrease) in deposits (1,216,350) 9,976,765
Proceeds from advances and other
borrowed money 91,000,000 4,000,000
Repayments of advances and other
borrowed money (51,000,000) (7,000,000)
Proceeds from issuance of common stock --- 123,700
Repurchase of common stock (112,901) ---
Net cash provided by
financing activities 38,053,434 6,509,827
INCREASE IN CASH AND CASH EQUIVALENTS (833,477) 5,162,819
CASH AND CASH EQUIVALENTS-beginning of period 10,131,157 7,266,145
CASH AND CASH EQUIVALENTS-end of period $9,297,680 $12,428,964
See accompanying notes to consolidated financial statements.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
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 and nine months ended December 31, 1999, are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2000.
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 December 31,
1999 and 1998 have been determined by dividing net income by the weighted
average number of shares of common stock outstanding during these periods
2,569,958 and 2,571,694, respectively. The number of shares used to determine
diluted earnings per share for the same three month periods was 2,569,958 and
2,573,226, respectively. Basic earnings per share for the nine months ended
December 31, 1999 and 1998 have been determined by dividing net income by the
weighted average number of shares of common stock outstanding during these
periods 2,571,414 and 2,568,691, respectively. The number of shares used to
determine diluted earnings per share for the same nine month periods was
2,571,414 and 2,594,982, respectively.
<PAGE>
COMMUNITY FINANCIAL CORPORATION
For the Three Months Ended
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
Weighted Weighted
Average Per-Share Average Per Share
Income Shares Amount Income Shares Amount
------- ------------ --------- ------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders $430,373 2,569,958 $0.17 $613,133 2,571,694 $0.24
Effect of Dilutive
Securities
Options --- --- --- 1,532
Diluted EPS
Income available to
common stockholders $430,373 2,569,958 $0.17 $613,133 2,573,226 $0.24
</TABLE>
COMMUNITY FINANCIAL CORPORATION
For the Nine Months Ended
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
Weighted Weighted
Average Per-Share Average Per Share
Income Shares Amount Income Shares Amount
------- ------------ --------- ------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders $1,311,154 2,571,414 $0.51 $1,492,636 2,568,691 $0.58
Effect of Dilutive
Securities
Options --- --- --- 26,291
Diluted EPS
Income available to
common stockholders $1,311,154 2,571,414 $0.51 $1,492,636 2,594,982 $0.58
</TABLE>
<PAGE>
NOTE 3. - STOCKHOLDERS' EQUITY
The following table presents the Bank's capital levels at December 31, 1999
relative to the requirements applicable under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989:
Amount Percent Actual Actual Excess
Required Required Amount Percent Amount
---------- --------- --------- ------- -----------
Tangible Capital $ 3,614,000 1.50% $23,849,000 9.95% $20,235,000
Core Capital 9,636,000 4.00 23,849,000 9.95 14,213,000
Risk-based Capital 12,818,000 8.00 26,168,000 16.33 13,350,000
The Bank may make a capital distribution without the approval of the Office of
Thrift Supervision (the "OTS"), provided that it notifies the OTS 30 days before
it declares the capital distribution and meets the following requirements: (i)
the Bank has a regulatory rating in one of the two top examination categories,
(ii) the Bank is not of supervisory concern, and will remain adequately- or
well-capitalized, as defined in the OTS prompt corrective action regulations,
following the proposed distribution, and (iii) the distribution does not exceed
the Bank's net income for the calendar year-to-date plus retained net income for
the previous two calendar years (less any dividends previously paid). If the
Bank does not meet the above stated requirements, it must obtain the prior
approval of the OTS before declaring any proposed distributions.
NOTE 4. - SUPPLEMENTAL INFORMATION - STATEMENT OF CASH FLOWS
Total interest paid for the three months ended December 31, 1999 and 1998 was
$2,310,699 and $1,904,816, respectively. Total interest paid for the nine months
ended December 31, 1999 and 1998 was $6,076,483 and $5,582,318. Total income
taxes paid for the three months ended December 31, 1999 and 1998 was $230,583
and $217,482. Total income taxes paid for the nine months ended December 31,
1999 and 1998 was $972,751 and $987,444.
<PAGE>
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." In addition, "it includes all changes in equity during a period except
those resulting from investments by owners and distributions to owners."
Comprehensive income for the Bank 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 and nine-months ended December
31, 1999 and 1998:
Three Months Ended December 31
--------------------------------
1999 1998
--------- ---------
Net income $ 430,373 $ 613,133
Other comprehensive income,
net of tax
Unrealized gains(losses)on securities:
Unrealized holding gains(losses)
arising during the period (457,807) 698,555
Less: Reclassification
adjustment for(gains)losses
included in net income --- (379,465)
--------- ---------
$( 27,434) $ 932,223
========== =========
Nine Months Ended December 31
--------------------------------
1999 1998
--------- ---------
Net income $ 1,311,154 $1,492,636
Other comprehensive income,
net of tax
Unrealized gains(losses)on securities:
Unrealized holding gains(losses)
arising during the period (542,656) 805,262
Less: Reclassification
adjustment for (gains)losses
included in net income (372,875) (468,939)
----------- ----------
$ 395,623 $1,828,959
=========== ==========
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
FINANCIAL CONDITION
The Company's total assets increased $37.9 million to $238.7 million at December
31, 1999, due primarily to an increase in held to maturity securities of $21.3
million which was funded by reverse repurchase borrowings and Federal Home Loan
Bank ("FHLB") advances. Approximately $20 million of the increase in securities
was part of the Company's asset/liability strategy to increase net interest
income. Deposits decreased $1.2 million to $151.8 million at December 31, 1999,
from $153.0 million at March 31, l999 while borrowings increased during the same
period from $19.0 million to $59.0 million. The decrease in deposits was due
primarily to seasonal withdrawals from transaction accounts. Stockholders'
equity decreased to $26.0 million at December 31, 1999, from $26.4 at March 31,
1999, due primarily to earnings for the nine month period ended December 31,
1999 which was offset by aggregate payments of $0.24 per share in cash dividends
and a decrease in the unrealized gain on securities available for sale.
At December 31, 1999, non-performing assets totaled $1.8 million or .80% of
assets compared to $1.1 million or .60% of assets at March 31, 1999.
Non-performing loans totaled $329,000 or .14 % of total loans at December 31,
1999 compared to $750,000 or .44% of total loans at March 31, 1999. At December
31, 1999 non-performing assets were comprised of eight personal residence loans,
seven single family rental properties, one commercial loan and four consumer
loans more than ninety days past due. Also included in non-performing assets is
approximately $475,000 of single family residential properties and one
multi-family loan of $360,000 which was acquired by foreclosure. In addition to
the nonperforming assets, at December 31, 1999, we had other loans of concern
consisting of eight single family loans, five rental real estate loans, two
commercial loan with total balances of $450,000 and unsecured loans with
balances of $41,000. Based on current market values of the collateral securing
our non-performing assets and other loans of concern, management does not
anticipate any significant losses in excess of the reserves for losses
previously recorded. While we currently believe that our loans are adequately
secured or reserved for, many of the loans made by us are secured by residential
properties used as vacation homes or rental properties by the borrowers. In the
event the real estate rental market substantially weakens or economic conditions
in our market area deteriorate, it is possible both that some of these borrowers
may default and that the value of the real estate collateral may be insufficient
to fully secure the loan. In such event, we may experience increased levels of
delinquencies and related losses having an adverse impact on net income. At
December 31, 1999 our allowance for loan losses totaled $1.2 million or .60% of
net loans receivable and 69% of non-performing assets. See "Results of
Operations -Nine Months Ended December 31, 1999 and 1998 - Provision for Loan
Losses."
Management establishes an allowance for loan losses based on an analysis of risk
factors in the loan portfolio. This analysis includes the evaluation of
concentrations of credit, past loss experience, current economic conditions,
amount and composition of the loan portfolio, estimated fair value of underlying
collateral, loan commitments outstanding, delinquencies, and other factors.
Since the Company has had low loan losses during its history, management also
considers loss experience of similar portfolios in comparable lending markets.
Accordingly, the calculation of the adequacy of the allowance for loan losses
was not based directly on the level of non-performing assets.
<PAGE>
Management will continue to monitor the allowance for loan losses through the
provision for loan losses as economic conditions and other factors dictate.
Although the Company maintains its allowance for loan losses at a level which it
considers to be adequate to provide for losses, there can be no assurance that
future losses will not exceed estimated amounts or that additional provisions
for loan losses will not be required in future periods. In addition,
management's determination as to the amount of the allowance for loan losses is
subject to review by OTS and the Federal Deposit Insurance Corporation as part
of their examination process, which may result in the establishment of an
additional allowance based upon their judgement of the information available to
them at the time of their examination.
LIQUIDITY AND CAPITAL RESOURCES
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. Cash flow projections are regularly reviewed and
updated to assure that adequate liquidity is provided. As of December 31, 1999,
the Bank's liquidity ratio (liquid assets as a percentage of net withdrawable
savings and current borrowings) was 7.6%, which exceeds the regulatory
requirement.
The Bank is subject to certain capital to asset requirements in accordance with
Bank regulations. See Note 3 of the Notes to Consolidated Financial Statements
contained in this report.
RESULTS OF OPERATIONS
Three Months Ended December 31, 1999 and 1998.
- ----------------------------------------------
General. Net income for the three months ended December 31, 1999 was $430,373
compared to $613,133 for the three months ended December 31, 1998. The decrease
was due primarily to both an increase in noninterest expenses and a decrease in
the gain on sale of securities, offset by an increase in service charges, fees
and commissions and net interest income. Income before income taxes decreased to
$615,580 for the three months ended December 31, 1999 from $1,033,423 for the
three months ended December 31, 1998.
Interest Income. Total interest income increased to $4.4 million for the three
months ended December 31, 1999, from $3.6 million for the three months ended
December 31, 1998. The increase in interest income was due primarily to an
increase in the average balance of both outstanding loans and investments offset
by a decrease in the average yield on interest earning assets from 7.93% for the
three months ended December 31, 1998 to 7.89% for the three months ended
December 31, 1999.
Interest Expense. Total interest expense increased to $2.4 million for the three
months ended December 31, 1999, from $1.9 million for the three months ended
December 31, 1998. Interest on deposits decreased to $1.6 million for the three
months ended December 31, 1999 from $1.7 million for the three months ended
December 31, 1998 due primarily to a decrease in the average rate paid on
deposits. The average rate paid on deposits for the three months ended December
31, 1999 was 4.18% compared to 4.53% for the same period in the prior year.
Interest expense on borrowed money increased to $806,555 for the quarter ended
December 31, 1999, from $229,918 for the quarter ended December 31, 1998, due to
an increase in average borrowings. The average rate paid on interest-bearing
liabilities was 4.55% for the three months ended December 31, 1999 compared to
4.65% for the three months ended December 31, 1998.
<PAGE>
Provision for Loan Losses. The provision for loan losses increased to $122,408
for the three months ended December 31, 1999, from $36,000 for the three months
ended December 31, 1998. The increase in provision for loan losses is
attributable primarily to charge-offs on one-to-four family loans and foreclosed
property for the three months ended December 31, 1999. "See Financial
Condition."
Noninterest Income. Noninterest income decreased to $935,117 for the three
months ended December 31, 1999, from $1,029,578 for the three months ended
December 31, 1998 due primarily to a decrease in gain on sale of securities
offset by an increase in charges, fees and commissions. The increase in service
charges, fees and commissions is due to the increase in secondary mortgage loan
sales at Community First Mortgage.
Noninterest Expenses. Noninterest expense increased to $2.2 million for the
three months ended December 31, 1999, from $1.6 for the three months ended
December 31, 1998. The increase in noninterest expense is attributable to both
increased secondary market loan sales and an increase in compensation and other
expenses related to the opening of an additional office in Staunton, Virginia
during the quarter.
Taxes. Taxes decreased to $185,477 for the three months ended December 31, 1999,
from $420,290 for the three months ended December 31, 1998, due to both a
decrease in income before taxes and a decrease in the effective income tax rate
to 30% for the three months ended December 31, 1999. The decrease in the
effective tax is due to an increase in tax preferred investment securities.
Nine Months Ended December 31, 1999 and 1998
- --------------------------------------------
General. Net income for the nine months ended December 31, 1999 was $1.3
compared to $1.5 for the nine months ended December 31, l998. The decrease was
due primarily to an increase in noninterest expenses, offset by an increase in
net interest income. Income before income taxes decrease from $2.6 million for
the nine months ended December 31, 1998 to $2.2 million for the same period
ended December 31, 1999.
Interest Income. Total interest income increased to $11.9 million for the nine
months ended December 31, 1999, from $10.7 million for the nine months ended
December 31, 1998, due primarily to an increase in the average balance of loans
and investment securities outstanding during the period, offset by a decrease in
the yield on loans and securities from 8.15% to 7.92% for the same periods.
Interest Expense. Total interest expense increased to $6.3 million for the nine
months ended December 31, 1999, from $5.6 million for the nine months ended
December 31, 1998. Interest on deposits decreased to $4.7 million for the nine
months ended December 31, 1999, from $4.8 million for the same period last year
due primarily to a decrease in the rate paid. The rate paid on deposits
decreased from 4.57% for the nine months ended December 31, 1998 to 4.21% for
the same period in the current fiscal year. Interest expense on borrowed money
increased to $1.5 million for the nine months ended December 31, 1999 from
$737,000 for the nine months ended December 31, 1998, due primarily to increased
borrowings offset by a decrease in the rate paid.
Provision for Loan Losses. The provision for loan losses increased to $301,562
for the nine months ended December 31, 1999, from $135,999 for the same period
last year. The increase is attributable primarily to increased charge-offs on
one-to-four family loans and foreclosed property for the nine months ended
December 31, 1999 compared to the nine months ended December 31, 1998.
Noninterest Income. Noninterest income increased to $2.9 million for the nine
months ended December 31, 1999, from $1.8 million for the nine months ended
December 31, 1998, due to an increase in service charges, fees, and commissions,
primarily from increased mortgage loan sales.
<PAGE>
Noninterest Expenses. Noninterest expenses increased to $6.1 million for the
nine months ended December 31, 1999, from $4.2 million for the same period last
year. The increase in noninterest expense is attributable to both an increase in
compensation due to increased staffing and other expenses related to the growth
of Community First Mortgage and expenses associated with the opening of
additional office in Staunton, Virginia during the quarter ended December 31,
1999.
Taxes. Taxes decreased to $852,711 for the nine months ended December 31, 1999,
from $1,087,846 for the nine months ended December 31, 1998 due to the decrease
in income before taxes.
Forward-Looking Statements
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
with respect to our financial condition, results of operations and business.
These forward-looking statements involve certain risks and uncertainties. When
used in this Quarterly Report on Form 10-QSB or future filings by us with the
Securities and Exchange Commission, in our press releases or other public or
shareholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely result", "are
expected to", "will continue", "is anticipated", "estimate", "project",
"believe" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. We wish to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors including regional and national economic
conditions, changes in levels of market interest rates, credit risks of lending
activities, and competitive and regulatory factors could affect our financial
performance and could cause our actual results for future periods to differ
materially from those anticipated or projected.
We do not undertake and specifically disclaim any obligation to publicly release
the result of any revisions, which may be made to any forward-looking statements
to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
<PAGE>
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY FINANCIAL CORPORATION
Date: February 9, 2000
By: /s/ R. Jerry Giles
-------------------------------
R. Jerry Giles
Chief Financial Officer
(Duly Authorized Officer and Principal
Accounting Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY
REPORT ON FORM 10-QSB FOR THE QUARTER ENDED DECEMBER 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> DEC-31-1999
<CASH> 9,297,680
<INT-BEARING-DEPOSITS> 2,405,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,805,366
<INVESTMENTS-CARRYING> 26,847,223
<INVESTMENTS-MARKET> 0
<LOANS> 183,256,984
<ALLOWANCE> 1,200,000
<TOTAL-ASSETS> 238,675,766
<DEPOSITS> 151,798,726
<SHORT-TERM> 59,000,000
<LIABILITIES-OTHER> 1,714,441
<LONG-TERM> 0
0
0
<COMMON> 25,609
<OTHER-SE> 26,063,526
<TOTAL-LIABILITIES-AND-EQUITY> 238,675,766
<INTEREST-LOAN> 11,921,271
<INTEREST-INVEST> 899,444
<INTEREST-OTHER> 112,992
<INTEREST-TOTAL> 11,921,271
<INTEREST-DEPOSIT> 4,737,588
<INTEREST-EXPENSE> 6,249,883
<INTEREST-INCOME-NET> 5,671,388
<LOAN-LOSSES> 301,562
<SECURITIES-GAINS> 601,412
<EXPENSE-OTHER> 6,095,910
<INCOME-PRETAX> 2,163,865
<INCOME-PRE-EXTRAORDINARY> 2,163,865
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,311,154
<EPS-BASIC> .51
<EPS-DILUTED> .51
<YIELD-ACTUAL> 0
<LOANS-NON> 1,800,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
